The Toronto stock market sold off across all sectors on Monday afternoon in another round of worry about the euro-zone debt crisis spreading to larger economies.
The S&P/TSX Composite Index ended a dreadful day down 191.95 points, or 1.4%, to 13,179.75
The Canadian dollar fell 0.85 cents to 103.25 cents U.S.
Investor sentiment further soured Monday on the possibility that Europe’s debt crisis might be spreading to Italy as the yield on government bonds shot up Monday, in contrast to other big economies.
Worries Italy could be engulfed in the financial crisis pushed the interest rate on a 10-year Italian bond up to 5.64% while the rate on the German equivalent, considered the safest in the euro-zone, traded at 2.67%
Italy’s high debt of nearly 120% of GDP and poor growth prospects have made it vulnerable to the euro-zone’s debt crisis. Two ratings agencies have warned the country needs to get its public finances in order or risk a downgrade.
Bank stocks were whacked on Italy’s main stock market with Unicredit dropping by as much as 10% and Intesa Sanpaolo by 9%, before recovering a bit on closing.
The TSX energy sector lost ground as Suncor Energy was 99 cents lower to $38.30 while Canadian Natural Resources also dropped 99 cents to $39.37.
The September copper contract in New York lost four cents to $4.37 U.S. a pound. The base metals sector was also down with Teck Resources down 38 cents to $49.77 while First Quantum lost $5.60 to $130.60.
Vancouver-based Peregrine Metals Ltd. has received a friendly $487.1-million U.S. takeover offer from Stillwater Mining Co. Peregrine owns an undeveloped copper and gold deposit in Argentina’s San Juan province that Stillwater plans to develop and operate. Stillwater would exchange the equivalent of $3.16 in cash and shares for each Peregrine share, including $1.35 U.S. in cash and Peregrine shares soared $1.79 or 221% to $2.60.
All sectors were lower with the industrials group down. Canadian Pacific Railway shed 67 cents to $59.42.
The financial sector fell with CIBC down 86 cents to $74.74 while TD Bank lost 68 cents to $79.69.
The gold sector was down late in the morning and Kinross Gold Corp. faded 25 cents to $15.77.
Valeant Pharmaceuticals International Inc. has signed an agreement to purchase Dermik, a unit of Sanofi, for $425 million. Dermik is behind such brand names as Benzaclin, for the treatment of acne; Carac, for the treatment of keratoses; and Sculptra, a facial injectable for the correction of facial wrinkles and folds. Valeant shares gave back 50 cents to $50.70.
Centerra Gold Inc. has increased its 2011 exploration budget by 18% to $40 million, with $4 million of the additional money allocated to a "significant" precious and base metal discovery on the Altan Tsagaan Ovoo property in Mongolia. To date, Centerra has spent $6.5 million on the ATO property since acquiring it in May 2010.
Centerra shares improved by 51 cents to $17.26.
On the economic front, Canada Housing and Mortgage Corporation said Canada saw housing starts rise by 1.7% in June compared to May, driven by increased activity in Ontario, the country's most populous province.
Home builders began 197,400 units -- adjusted for seasonal variations and calculated on an annual basis -- in the sixth month of the year. Many economic and industry organizations re-calculate monthly figures to show what the number means in terms of a full year's worth of activity to make comparisons between months and different years more meaningful.
ON BAYSTREET
The TSX Venture Exchange doffed 39.11 points to 1,945.70, while the Nasdaq Canada index shed 17.24 points to 549.38
In Toronto, all 14 subgroups were down on the day. Energy stocks slid 2.6%, while global base metal plays suffered 2.5%, and information technology stocks ditched 2.4%.
ON WALLSTREET
In New York, stocks sank Monday as investors got spooked by worries that Europe's debt crisis could spread to Italy, one of Europe's largest economies.
The Dow Jones Industrials jettisoned 151.44 points, or 1.2%, to 12,505.80
The S&P 500 dropped 24.31 points to 1,319.49, and the Nasdaq Composite Index plummeted 57.19 points to 2,802.62.
The selling was broad, with all 30 Dow stocks in the red. Shares of Bank of America and JPMorgan were among the worst performers on the blue chip index. Alcoa, which unofficially kicks off the second-quarter corporate reporting period after the closing bell, was also weak.
In Europe, stocks fell sharply in London, Frankfurt and Paris on concerns about Italy's banking sector and the nation's debt load. European officials met Monday to discuss Greece and other debt-stricken members of the European Union.
Traders are concerned that the fiscal problems facing troubled EU members such as Greece, Portugal and Ireland may be spreading to larger economies in the monetary union, including Italy and Spain.
Among the companies scheduled to report this week are JPMorgan Chase, Citigroup and Google
News Corp. sank 7% after the company said it was continuing its bid to purchase satellite TV company British Sky Broadcasting despite heightened political heat from the "News of the World" hacking scandal.
The company said in a statement it is taking its bid in front of the U.K.'s Competition Commission, effectively delaying News Corp's possible purchase of BSkyB until the first part of 2012 at the earliest.
Dow component Alcoa will be the first major company to release quarterly results, due out after the closing bell Monday. Analysts polled by Thomson Reuters expect the aluminum maker to post earnings per share of 32 cents U.S. on revenue of $6.31 billion U.S.
There are no major economic reports on the agenda Monday, but investors will keep a close eye on the deficit showdown in Washington.
Lawmakers will resume talks to raise the debt ceiling, and President Obama is scheduled to hold a news conference on the issue Monday morning.
The yield on the benchmark 10-year note fell to 2.92% from Friday's yield of 3.02%, as prices surged. Treasury prices and yields move in opposite directions.
Oil for August delivery fell $1.21 to $94.99 U.S. a barrel.
Gold prices soared $12.89 to a near-record high of $1,554.09 U.S. an ounce
