Stock markets were deep in the red Monday as the spectre of a possible swine flu pandemic unnerved investors.
Toronto's S&P/TSX composite index tumbled 131.08 points to end the day at 9,418.40.
Health stocks were a bright spot on stock markets while General Motors Corp. shares surged as the release of the automaker's restructuring plans raised hopes that GM can avoid bankruptcy.
The flu is not yet a global pandemic. But fears of such a development were ratcheted up over the weekend following confirmed human cases of the disease in Mexico, the United States and Canada.
World Health Organization spokesman Peter Cordingly said the new virus was spreading quickly in Mexico and the southern United States, and it could be expected to turn up anywhere.
The virus is striking at a vulnerable time for the stock market and the economy.
Fears that a spread of the swine flu virus could affect travel sent airline stocks lower.
WestJet dropped 64 cents to $12.12 while Air Canada gave back five cents to 80 cents.
Indexes in Toronto and New York have jumped more than 20% from lows reached in early March, and investors are in the middle of a deluge of mixed earnings reports.
There was at least some favourable news on the auto front, with word over the weekend that Chrysler LLC, racing against an April 30 deadline to cut labour costs or face bankruptcy, reached a tentative contract agreement with its biggest U.S. union and won ratification of an accord with Canadian workers.
Members of the United Auto Workers must still vote on their proposed money-saving contract, according to a statement yesterday from the Detroit-based union. Employees represented by the Canadian Auto Workers approved a contract that may save the automaker $240 million annually.
Elsewhere in the auto sector, Magna International Inc. is in talks to buy about 20% of General Motors Corp.’s Adam Opel AG in a transaction that would cut GM’s stake in the European automaker to about 45%, the Globe and Mail reported.
Still with Magna, the company is laying off about 725 employees temporarily at its biggest plant in the country.
The company announced this morning that Formet Industries, a manufacturing division of Magna International Inc.'s Cosma unit, will cut production and jobs dramatically at its St. Thomas plant next month because of the slide in demand for North American trucks.
The reduction represents more than half of the plant's workforce. Magna stock ended the day off $1.65 at $35.29.
The TSX financial sector was off, as Manulife Financial fell 68 cents to $20.01 and Scotiabank - which has the biggest presence in Mexico of the big Canadian banks - lost $1.08 cents to $34.09.
The energy sector fell, as EnCana Corp. was down $1.40 to $53.88 and Canadian Natural Resources declined $1.38 to $58.06.
Industrial stocks were also weak as Canadian National Railways dropped $1.28 to $48.16.
The gold sector backed off, as Barrick Gold Corp. fell 78 cents to $36.68.
An Indian mining company bought a chunk of HudBay Minerals Inc., the Canadian zinc and copper producer that is evaluating its strategic options, the Globe and Mail reported.
The purchase was made through Lakomasko BV, a closely held company base in Amsterdam, which owns 14.5 million HudBay shares, or 9.5% of the Toronto-based company, the newspaper said, citing documents filed in Ontario Superior Court. Shares of HudBay were up 8% at $6.72,
The Canadian dollar was off 0.54 cents to 82.13 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, 10 were negative, energy, real-estate and industrials each off about 1.8%.
The three gainers included consumer staples, ahead 1.5%, information technology, gaining 0.8% and utilities, 0.1% brighter.
The TSX Venture Exchange backpedaled 3.83 points to 1,002.98 while the Nasdaq Canada Index improved 9.31 to 662.51
ON WALLSTREET
The Dow Jones Industrials average plummeted 51.29 to end the day at 8025.00
The S&P 500 index dropped 8.72 points to 857.51, while the Nasdaq Composite Index moved 14.88 lower to 1,679.41.
Credit Suisse downgraded its rating on U.S. stocks one notch on Monday, saying the equities were expensive relative to those in other countries. The bank's report also said that first-quarter earnings have been mediocre.
Meanwhile, investors are waiting for the results of the stress tests the U.S. government is giving the country's 19 largest banks. Regulators briefed bank officials on Friday about the tests, which will determine which banks may need further help from the government, but the results will not be publicly released until May 4.
General Motors said it will offer 225 shares of common stock for every $1,000 U.S. in notes held by bondholders as part of a debt-for-equity swap.
General Motors Canada will slash its workforce by more than half to 4,400 by 2014 and close as many as 310 dealerships by the end of next year as part of the restructuring plan.
GM faces a June 1 deadline to restructure. GM shares ran ahead 19%.
Whirlpool on Monday reported profit fell 27% and sales dropped 23% in the first quarter. The company cut its outlook on exports.
Dow component Verizon Communications reported earnings of 63 cents U.S. per share, up from 61 cents a year ago. Analysts surveyed by Briefing.com thought income would fall to 59 cents per share. The telecom benefited from its purchase of rival telecom Alltel and growth in customers.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.94% from 2.99% Friday. Treasury prices and yields move in opposite directions.
U.S. light crude oil for June delivery fell $1.41 to settle at $50.14 U.S. a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $5.90 to settle at $908.20 U.S. an ounce.
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