North American stock markets closed at multi-year lows Monday after insurer American International Group Inc. stunned investors with the biggest quarterly corporate loss in U.S. history.
Toronto's S&P/TSX composite index dropped 435.51 points or about 5.3% to 7,687.51, its worst level since the fall of 2003.
The Toronto energy sector is also a major weight on the TSX. Suncor has dropped 9.8% after being downgraded to Market Perform from Outperform by Raymond James.
Canadian Natural Resources has plunged 14.3%, Encana is off 7.1% and Canadian Oil Sands is down 6.3%.
On one of the few bright notes, Masters Energy has surged 36.7% after the company announced it has agreed to be sold to Zargon Energy Trust for $1.83 per share.
Mining stocks are down as Teck Cominco plunged 10.7% and First Quantum is down 9.1%.
Materials and gold stocks are lower as the precious metal has dropped on the Comex. Goldcorp is down 4.5% and Kinross down 2.5%.
Financials are down with the big six banks seeing significant declines. Scotiabank is down 7.8% and CIBC has lost 7.4% to lead the decliners.
In corporate news, Nortel Networks Corp. is flat after the company announced financial results for the fourth quarter, posting a loss of $2.13 billion U.S. or $4.28 U.S. per share, compared to a loss of $0.84 billion U.S. or $1.70 U.S. per share in last year period.
Adjusted earnings for the period fell to $179 million U.S. or $0.36 U.S. per share from $193 million U.S. or $0.39 U.S. per share in previous year quarter.
Petrominerales has dropped 6.5% after the company announced its net income decreased to $20.28 million U.S., or $0.20 U.S. per share, from $23.49 million U.S., or $0.23 U.S. per share, in the year-ago quarter.
Livingston International Income Fund has declined 4.5% after the company announced further cost-cutting steps, including company-wide salary and hours reduction, elimination of salary increases and voluntary resignation incentive.
CanWest Global Communications has lost 15.5% after the company received a deadline extension to renegotiate the terms of some of its debt.
The Canadian dollar lost 0.87 cents to 77.44 cents US a day before the Bank of Canada makes its next announcement on interest rates.
Economists say it could cut by half a point, which would bring the central bank's key rate down to 0.5%.
Meanwhile, Statistics Canada reported that the Canadian economy contracted at an annualized rate of 3.4% in the fourth quarter – but that was still a better showing than the 3.5% decline that had been expected.
BAYSTREET
All 13 TSX sub-groups remained negative all day. Energy stocks slumped 8.5%, materials were off 7.3% and metals and mining stocks stumbled 7.1%.
The TSX Venture Exchange was down 33.42 points to 828.24, while the Nasdaq Canada index slid 30.67 points to 379.89
ON WALLSTREET
Wall Street's Dow Jones industrial average fell nearly 300 points to 6,763.29 after a 4% loss last week, plunging below 7,000 for the first time since May 1997.
The Standard & Poor’s 500 index retreated 34.27 points, at 700.82, closing at its lowest point since Oct. 28, 1996, while the NASDAQ composite index lost 54.99 points to 1,322.85
The losses were in large part driven by negative sentiment surrounding the AIG loss - a massive $61.7 billion U.S.
Washington said it will give AIG another $30 billion U.S. in loans, in addition to $150 billion U.S. it has already given the ailing insurer. It's the fourth time the government has stepped in to help AIG since September.
Also weighing on investor sentiment is an assessment by billionaire Warren Buffett that the American economy "will be in shambles throughout 2009 - and, for that matter, probably well beyond - but that conclusion does not tell us whether the stock market will rise or fall."
Buffett's insurance and investment company, Berkshire Hathaway Inc., reported during the weekend that it had its worst year ever in 2008.
Investors also braced for dreadful employment news at the end of the week. Economists project the American economy shed at least 640,000 jobs during February.
Experts have said there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000 unless the U.S. housing market can stabilize.
General Electric continued to retreat after saying Friday it is cutting its dividend by 68% to 10 cents U.S. per share from 31 cents U.S.
Before the opening bell, the U.S. government released the personal income and spending data for January. Personal income rose 0.4%, beating expectations of a 0.2% decline, according to a consensus of economic opinion from Briefing.com.
Personal spending rose for the first time in seven months, up 0.6%, which was higher than the 0.4% increase expected by Briefing.com consensus.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.90% from Friday's 3.01%. Treasury prices and yields move in opposite directions.
The April crude contract on the New York Mercantile Exchange fell $4.61 $40.15 U.S. a barrel on expectations of widening and deepening economic weakness.
COMEX gold for April delivery fell $1 to $941.50 U.S. an ounce.
