October 16, 2008 / 1:47 PM / in 9 years

Toronto stocks fall, but snap back from big loss

TORONTO (Reuters) - The Toronto Stock Exchange’s main index fought back from a 560-point loss on Thursday to close only moderately lower as bargain-hunting took hold.

<p>A Bay Street sign is seen at the financial district in Toronto, October 10, 2008. REUTERS/Mark Blinch</p>

In erratic dealings, the TSX seesawed in a trading range of 670 points from peak to trough and in the end extended Wednesday’s steep losses only slightly.

Gavin Graham, director of investments at BMO Asset Management, said the early selloff was based on fears that a recession in the United States and Europe could be a “pretty bad one”.

“You could actually make the argument that this sort of revisiting of the lows we saw last week is a lot more justified in that it’s being down on economic fundamentals as opposed to worries that the entire world financial system is going to seize up,” he said.

The S&P/TSX composite index closed down 53.88 points, or 0.58 percent, at 9,269.97, with half of its 10 main groups lower. Earlier in the day the index tumbled 562.83 points, or 6 percent, to 8,761.02, its lowest level since November 2004.

The composite index has been on a roller-coaster ride, surging 9.8 percent earlier this week after falling 16 percent last week. It is down 26 percent since Sept 25.

Thursday’s early selloff was linked to tumbles in commodity prices, said Peter Gibson, market strategist at Desjardins Securities.

“At the end of the day people were doing some bargain-hunting,” he said.

The heavily-weighted materials sector kept the index in the red as gold and base metals prices tumbled on fears a global recession would hit demand.

Goldcorp fell 10.9 percent to C$24.75, while Inmet Mining dropped 8.4 percent to C$23.25. Fertilizer producer Potash Corp of Saskatchewan tumbled 5.9 percent to C$87.00.

Oil and gas stocks, which had been lower through most of the day, staged a comeback and closed 2 percent higher despite oil’s $4.69 slide to $69.85 a barrel. EnCana Corp rose 5 percent to C$46.50.

The financials group dropped 0.4 percent with a mixed picture among individual stocks. Royal Bank of Canada rose 1.5 percent to C$45.66, while insurer Manulife Financial dropped 4.3 percent to C$27.80.

The world’s richest nations are in, or close to, recession and further interest rate cuts are needed to stem off more rot from the financial crisis, a quarterly Reuters poll showed on Thursday.

According to the poll, however, the Canadian economy should steer clear of a recession but can expect little growth.

Market volume was 556.4 million shares worth C$7.68 billion. Decliners outpaced advancers 1,096 to 511. The blue chip S&P/TSX 60 index closed 3.04 points, or 0.54 percent, lower at 559.12.

The Dow Jones industrial average rose 401.35 points, or 4.68 percent, to 8,979.26, while the Nasdaq Composite Index ended up 89.38 points, or 5.49 percent, at 1,717.71.

($1=$1.18 Canadian)

Reporting by Jennifer Kwan; Editing by Peter Galloway

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