The Toronto stock market was down nearly 2% as losses accelerated Monday afternoon amid weaker commodity prices and fresh anxiety over a potential default by the Greek government on its loans.
The S&P/TSX Composite Index tumbled 238.71 points, or 1.9%, to 12,148.83
The Canadian dollar inched up 0.30 of a cent to 100.71 cents U.S., after earlier dipping below parity for the first time since January as investors nervous about Europe’s debt problems sought safety in the U.S. dollar.
The mining sector was the biggest loser on the TSX, with shares in Teck Resources Ltd. down $1.45 to $39.13.
Debt-crippled Greece urgently needs to keep a program of cutbacks on track to secure the continued flow of international rescue loans — worth euro219 billion ($302.6 billion U.S.) — protecting it from a catastrophic bankruptcy.
Investors are also worried that ratings agencies may downgrade the credit ratings of French banks, which could bring more instability to Europe’s beleaguered financial system.
A default by Greece or one of the continent’s other heavily indebted governments could ripple through the global banking system and make it more difficult for other European countries to borrow money. Economists worry that Europe’s financial crisis could tip a weakening U.S. economy into another recession.
The resignation of a key European Central Bank official combined with worries over a new recession in the United States led to a large stock market selloff on Friday. The TSX closed last week down 1.7% and the Dow Jones Industrials finished the week down 2.7%.
In Canadian corporate news, Enbridge Inc. announced plans Monday to spend $1.2 billion to expand its Athabasca pipeline system in order to accommodate increased production from the burgeoning Kirby oilsands region south of Fort McMurray, Alta. Shares lost 27 cents to $31.58.
Mosaid Technologies Inc. says it is exploring a "broad range of alternatives" to Wi-LAN Inc.’s offer of $38 per share. Mosaid shares lost 55 cents to $39.12, while Wi-LAN shares fell 3%, or 21 cents, to $6.74.
Design software maker 20-20 Technologies Inc. posted third-quarter net earnings of $403,000, or two cents per share, sliding from $840,000, or four cents per share, a year ago. Revenues increased 17.6% to $17.4 million. Shares gained two cents at $2.77 each.
And Coastal Contacts Inc. posted a third-quarter loss of $1.5 million from a profit of $529,000 a year ago on higher overall costs. Sales increase to $49.6 million from $39.5 million. Shares lost 1.5% or four cents to $2.65.
ON BAYSTREET
The TSX Venture Exchange lost 39.57 points to 1,745.53, while the Nasdaq Canada index backpedaled 1.46 points to 507.14
All but one of the 14 Toronto subgroups were in the red on the day. Metals and mining dipped 3.9%, while gold doffed 3.3% and materials sank 3.2%.
Only information technology stocks gained, and only 0.5% at that.
ON WALLSTREET
In New York, stocks finished a choppy session higher Monday, as investors who have been worried about a deepening European debt crisis pinned their hopes on a report that China is in talks with Italy to buy the cash-strapped country's debt.
The Dow Jones Industrials grew 68.99 points to close at 11,061.10.
The S&P 500 prospered 8.04 points to 1,162.27, while the Nasdaq strengthened 27.10 points to 2,495.09.
Technology shares managed to eke out small gains, boosted by a 50% surge in shares of Netlogic after Broadcom agreed to buy the semiconductor company for $3.7 billion U.S.
But trading was volatile as a lack of investor confidence kept the broader market under pressure.
On the upside, chipmaker Intel was the best performer on the Dow, with shares up 1%, while Micron Technology and eBay were among the biggest gainers in the S&P 500 and Nasdaq.
Bank of America shares fell 1%. Earlier in the day, shares were higher after CEO Brian Moynihan said the bank plans to cut costs by 8% through 2014. The bank also confirmed that it expects to cut 30,000 jobs in the 'next few years' as it moves to refocus its banking business.
Other bank stocks also fell, with shares of Citigroup, Goldman Sachs and JPMorgan Chase down between 1% and 2.5%.
McGraw Hill agreed to split into two companies -- one focused on its education unit, and the other will combine Standard & Poor's, McGraw-Hill Financial and Business Information. Shares of McGraw-Hill rose nearly 2%.
Stocks were mostly lower throughout Monday's volatile session, as investors struggled with a new wave of anxiety over the possibility that Greece will default on its debts.
Adding to the jitters, France's top banks could be facing a credit downgrade from ratings agency Moody's, according to Reuters. Traders expect a downgrade announcement could be issued at any moment as the 90-day window for a review comes to a close. The credit ratings agency issued the review on June 15.
But stocks gained some traction, turning modestly higher during the final hour of trading, after the Financial Times said Italy's government may make "significant purchases of Italian bonds and investments in strategic companies."
If China indeed comes to the rescue of debt-ridden Italy, "it would be a welcome sign of improving stability" in the ongoing European debt crisis, said one expert.
Economically speaking, President Obama will make a new pitch for his $447-billion U.S. job creation act from the Rose Garden Monday and then he will send the stimulus plan to Congress this evening.
Prices for the 10-year Treasury fell, raising the yield to 1.93% from 1.89% late Friday. Prices and yields for Treasurys move in opposite directions.
Oil for October delivery popped higher by $1.20 to $88.44 U.S. a barrel.
Gold futures for December delivery fell $47.00 to $1,812.50 U.S. an ounce.
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