TSX tails off

May 17, 2010 (Baystreet.ca) --

Fears that the effects of a government debt crisis could wind up pushing Europe into a severe downturn sent the Toronto stock market tumbling Monday.

The S&P/TSX composite index collapsed 201.97 points, or 1.7%, to 11,911.66, in a broad-based selloff, which left the Toronto market a handful of points below where it started 2010 trading.

The loss surpassed 300 points at some points in the trading day.

The TSX energy sector was down as Canadian Natural Resources fell $1.29 to $71.31 while Suncor Energy lost 81 cents to $31.25.

The base metals sector was down 6.6% as the July copper contract on the Nymex lost ground for a second day down 20 cents to $2.93 U.S. a pound as concern over growth in China depressed metal prices.

China's premier Wen Jiabao has emphasized the need to control surging housed prices, again sparking concern the government could tighten lending, which could slow the economy.

A strong Asian rebound has helped the global economy start to recover from recession and in particular has boosted commodity prices and oil and mining stocks on the TSX.

Teck Resources declined $2.21 to $33.13 while HudBay Minerals fell 37 cents to $10.91.

The TSX global gold sector lost ground, as Barrick Gold Corp. faded $1.21 cents to $45.87 while Kinross Gold Corp. shed 68 cents to $18.89.

The industrials sector was down with Bombardier Inc. down 22 cents to $5.17 while Canadian National Railways declined 38 cents to $60.90.

In other corporate news, TD Bank Financial Group Inc. said it is expanding its presence in the U.S. Southeast by buying South Financial Group, Inc. for a total of $191.6 million U.S.

South Financial has incurred more than $1.3 billion U.S. in losses since the beginning of 2008, primarily as a result of loan charges associated with real estate loans and mortgages. TD shares were off $1.17 to $72.22.

In economic news, Canadian Real Estate Association said, on a seasonally adjusted basis, a total of 42,078 existing homes changed hands in April, which was 20.1% higher compared to the same month last year.

The Canadian dollar moved down 0.16 cents to 96.76 cents U.S.

ON BAYSTREET

All but one of the 14 TSX subgroups were down. Metals and mining stocks slid 5.8%, while materials and global base metals capsized 3.8% each.

The TSX Venture Exchange tailed off 38.44 points to 1,554.67, while the Nasdaq Canada index moved 5.34 points lower to 737.67

ON WALLSTREET

In New York, stocks trimmed losses late Monday after the euro turned higher against the dollar. The euro had hit a four-year low earlier and it remained under pressure as Europe's financial worries lingered.

The Dow Jones industrial average actually scrambled into the green 5.67 points to 10,625.83, after being nearly 200 points into the red much of the day.

The S&P 500 index recovered 1.26 points to 1,136.94. The Nasdaq composite index regained 7.38 points to 2,354.23.

Energy stocks were off, though, with Massey Energy Co., down nearly 11%. First Solar Peabody Energy and Consol Energy each lost about 6%.

Earlier on Monday, the euro sank below $1.23 U.S., as debt concerns weighed on investors. But the currency recovered its losses late in the afternoon.

U.S. stocks tumbled Friday, as the Dow lost 1.5%, and S&P 500 and Nasdaq slipped about 2% on a weak euro.

Investors remained concerned about soaring deficits throughout Europe despite the $1-trillion U.S. aid package for Greece and other debt-ridden nations that had triggered a rally in stocks early last week. Despite Friday's decline, the three major indexes ended higher for the week.

General Motors posted its first quarterly profit in nearly three years, earning $865 million U.S. on revenue of $31.5 billion U.S. After emerging from bankruptcy last July, the company has trimmed costs and increased sales thanks to an improving economy and recall troubles at rival Toyota.

Hope improvement retailer Lowe's posted a profit that rose 2.7% from a year earlier and topped expectations as demand for big-ticket items improved. But the company's forecast for the second quarter came in lower than expectations, and shares of the retailer were down about 4%.

Economically speaking, a report from the Federal Reserve Bank of New York showed that manufacturing growth slowed in the region in May. The Empire State Manufacturing Survey's index fell to 19.1 from 31.9 in April. Economists surveyed by Briefing.com expected the index to slip modestly to 30.

The Treasury said China boosted its holdings of U.S. debt in March for the first time in six months, increasing them by 2% to $895.2 billion. With mounting concerns over European debt and a strengthening U.S. economy, overall foreign holdings of Treasury securities rose by 3.5% to $3.88 trillion.

Treasury prices lost ground, raising the yield on the 10-year note to 3.47% from Friday's 3.44%. Treasury prices and yields move in opposite directions.

The price of a barrel of oil stumbled $1.73 to $73.70 U.S.

Gold prices tumbled eight dollars to $1,220 U.S. an ounce