Fears of a slowing global economy dogged the Toronto stock market Wednesday with the main index tumbling almost 200 points.
The S&P/TSX Composite slid 198.26 points, or 1.7%, to end the day at 11,728.41, led by falling resource and bank stocks following a four-day shutdown for the Christmas and Boxing Day holidays
The Canadian dollar skidded 0.51 cents to 97.65 cents U.S.
Worries about a return to recessionary conditions in many parts of the world have helped push the TSX down almost 13% this year.
Trading volumes are very light this week and any event big enough to catch the attention of traders could have an amplified effect due to the low activity.
Oil prices jumped Tuesday amid threats from Iran to close the vital Straits of Hormuz at the mouth of the Persian Gulf, the passageway for one-sixth of the world's oil shipments. Suncor Energy fell 72 cents to $28.56.
The base metals sector lost ground as the March copper contract in New York dipped a penny to $3.38 U.S. a pound. Teck Resources lost $1.19 to $35.09.
Gold stocks took a hit, as Barrick Gold Corp fell $1.70 to $45.24.
Financials also contributed to the negative showing, with Royal Bank down 53 cents to $50.77.
On the corporate front, Shoppers Drug Mart was down $1.41 to $40.59 after the Ontario government on Friday won an appeal restoring a ban on private label generic drugs in an ongoing battle with Shoppers and other big pharmacy chains.
RuggedCom Inc. has adopted a poison pill shareholder rights plan to give its directors time to look for alternatives to an unsolicited $272.4-million takeover bid by Belden Inc. RuggedCom's shareholder rights plan will allow the board of directors to double the number of shares outstanding under certain circumstances. Its shares were flat at $24.05.
Aircraft and train builder Bombardier Inc. said Wednesday it had won a government-subsidized $295-million order for 130 new rail carriages, months after it announced it would cut about 1,400 jobs in Britain and questioned its future in the country. Bombardier shares slipped six cents to $3.94.
Sears Canada Inc. shares lost $1.16 to $10.40, a day after its U.S. parent company, Sears Holdings Corp., said it plans to close between 100 and 120 Sears and Kmart stores after poor sales during the holidays, the most crucial time of year for retailers. The closures do not apply to Canada.
Last month, Sears Canada laid off about 70 employees at its head office in downtown Toronto as the retailer works to overcome a loss of nearly $47 million in its latest quarter.
Moly Mines Ltd. shares dropped four cents to 29.5 cents after it put its Spinifex Ridge molybdenum-copper project on hold due to low molybdenum prices and the high Australian dollar.
It also said it is considering a revision of its loan structure with China Development Bank for financing of new mining projects.
ON BAYSTREET
The TSX Venture Exchange gave back 18.60 points to 1,451.08, while the Nasdaq Canada index dropped 10.51 points to 362.28
All 14 Toronto subgroups were in the red, with gold down 4.3%, materials off 4.2%, and global base metals down 2.7%.
ON WALLSTREET
In New York, stocks moved down roughly 1% Wednesday, as investors continued to fret over how Europe could solve its debt troubles in 2012.
The Dow Jones Industrials stumbled 139.94 points, or 1.1%, to 12,151.40
The S&P 500 slumped 16.43 points to 1,249, while the Nasdaq Composite fell 35.22 points to 2,598.98.
Still, the selling intensified by mid-afternoon after a relatively flat open. The S&P fell back into negative territory for the year.
Dragging down the technology sector Wednesday were RIMM, Netflix and Fossil. The Nasdaq is down roughly 2% for 2011. The Dow is up 5% for 2011.
While stocks were down, traders continued to watch and hope that the S&P might be able to clear a 1,260 hurdle before markets close for the year. The index closed at 1,257 in 2010 and currently is hovering around 1,250.
Shares in the financial sector were under pressure. Citigroup, Credit Suisse, Wells Fargo, Jefferies and Bank of America were all down between 1% and 4%.
U.S. stocks have been buoyed recently by signs of improvement in the U.S. economy, including declines in weekly claims for unemployment benefits and an uptick in new home construction.
But investors say the market remains vulnerable as the debt crisis in Europe continues to threaten the outlook for the global economy and financial markets.
One bright spot for Europe on Wednesday was an Italian auction of three- and 24-month bonds that drew strong demand and yields half as high as the previous month's auctions. The results helped lift European equities and banks.
Investors will be more closely watching Thursday's auction of Italian 10-year bonds, which have seen yields continue to flirt with the 7% danger zone. That level is worrisome because it flashed the first warning signs for Ireland, Portugal and Greece, which all eventually needed bailouts.
U.S. stocks have been supported recently by signs of improvement in the economy, including declines in weekly claims for unemployment benefits and an uptick in new home construction.
But investors say the market remains vulnerable as the debt crisis in Europe continues to threaten the outlook for the global economy and financial markets.
The price on the benchmark 10-year U.S. Treasury shot up, pushing the yield down to 1.91% from 2.01% Tuesday. Treasury prices and yields move in opposite directions.
Oil for January delivery subsided $1.81 to $99.53 U.S. a barrel.
Gold futures for February delivery fell $34.70 to $1,560.60 U.S. an ounce.
