The Toronto Stock Exchange was sharply lower Monday as commodity prices weakened and investors took in growing doubts that the United States can reach agreement on a solution to its deficit woes, which added to concerns about the European debt crisis.
The S&P TSX Composite Index slid 212.64 or 1.8%, to approach noon ET at 11,679.80
The Canadian dollar lost 0.98 cents, trading at 96.37 U.S. cents. It was trading at 99 U.S. cents just a week ago.
The Toronto market tumbled 384 points or 3.1% last week as investors become more wary of making bets because of the uncertainty surrounding the debt crisis and frustration over an apparent lack of recognition by euro zone leaders that time is running out and the available options for dealing with it dwindle.
In Canadian corporate news, Valeant Pharmaceuticals International Inc. says it has signed an agreement to acquire iNova, a private Australian pharmaceutical group in a deal that could be worth as much as $714 million. Valeant shares added 72 cents to $44.47.
Aecon Group Inc. said it has a preliminary agreement worth $250 million to do interior work on a new process mill at the Potash Corp, mine site in Saskatchewan. Its shares fell 1.5% or 15 cents to $10.08.
Fairfax Financial Holdings Ltd. has joined the bidding for Prime Restaurants Inc. with an offer of $71 million for the company that operates such eateries as East Side Mario's, Casey's and D'Arcy McGee's. Fairfax shares added $5.55 to $427.02, while Prime shares were up 10% or 67 cents to $7.60.
Prime says it solicited the offer from Fairfax under a provision of its agreement with Cara, which offered last month to pay $59 million for the company. Under its agreement with Prime, Cara now has five business days to submit another bid or back away and receive a termination fee.
Economically speaking, Statistics Canada reported that wholesale sales increased for a fifth consecutive month in September, rising 0.3% to $48.7 billion. Gains in the food, beverages and tobacco products subsectors were partially offset by drops in the machinery, equipment and supplies’ sectors.
ON BAYSTREET
The TSX Venture Exchange subtracted 51.86 points to 1,555.81, while the Nasdaq Canada index faded 13.63 points to 385.90.
All but two of the 14 Toronto subgroups remained down by midday. Metals and mining sank 3.6%, global base metals crumbled 3.1% and energy skidded 2.8%.
Health-care stocks held out against the tide, gaining 0.5%, to be joined at lunch by consumer staples, edging up 0.05%.
ON WALLSTREET
In New York, a selloff on Wall Street gained momentum Monday, with the Dow sinking more than 300 points, as investors remained on edge about the lack of progress on solving U.S. and European debt problems.
The Dow Jones Industrials deducted 311.37 points, or 2.6%, as morning turned to afternoon, to 11,484.80
The S&P 500 sifted off 28.80 points, to 1,186.85, while the Nasdaq Composite Index moved down 63.33 points to 2,509.17.
All 30 Dow stocks were in the red, with the blue-chip index sliding into negative territory for the year. The S&P 500 and Nasdaq are already both down roughly 5% for the year. Only five of the S&P 500 were showing modest gains.
The selling was broad, with financial shares among the biggest losers. Shares of JPMorgan Chase, Citigroup, Goldman Sachs and Bank of America were all down between 2.8% to 5%.
Gilead Sciences said Monday it plans to buy drug developer Pharmasset for $11 billion U.S.
Shares of Pharmasset soared nearly 85%, while Gilead shares fell 10%.
LinkedIn's shares dropped roughly 7% as its lockup period expired Monday. Pre-IPO investors can now sell stock.
Hewlett-Packard is on tap to report results after the bell.
Investors are growing increasingly concerned that Congress's failure to act could cause Moody's and Fitch to consider downgrading U.S. debt, following S&P's decision in August to take away its AAA rating.
Congress' super committee, which had been given extra powers to tackle the U.S.'s seemingly intractable debt problems, is expected to admit Monday that it could not agree on $1.2 trillion U.S. in budget reductions.
Meanwhile, investors couldn't take any solace from Europe. Intensifying worries about the euro-zone debt crisis pummeled European markets.
Moody's issued a warning on France's creditworthiness Monday, saying that rising interest rates on French government debt caused the difference in yield between French and German 10-year bonds to widen more than 200 basis points last week -- a record for the euro-zone.
Economically speaking, the U.S. National Association of Realtors on Monday said existing home sales rose 1.4% to a seasonally adjusted annual rate of 4.97 million from 4.9 million in September. Economists had anticipated a decline to an annual rate of 4.8 million in October.
The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.97% from 2.01% late Friday.
Oil for January delivery slipped $1.11 to $96.60 U.S. a barrel
Gold futures for December delivery lost $16.70 to $1,708.50 an ounce.
