TSX dives, led by energy; global worries intensify

TORONTO: Toronto's main stock market index fell more than 1 percent on Thursday as rising concerns over the global economy and a sharp fall in oil prices prompted investors to head for the exits.

Commodity prices were down more than 2.6 percent following data that showed higher-than-expected US jobless claims, slowing private sector activity in Europe, and a barely expanding factory sector in China.

Oil prices dropped after the United States and International Energy Agency said they would release 60 million barrels of oil from strategic stockpiles to help the global economy.

Canadian energy shares, down 2.5 percent, played the biggest role in leading the market lower. Suncor Energy, which fell 2.8 percent to C$36.48, and Canadian Natural Resources, off 2.9 percent to C$38, were among the heaviest decliners.

Investors were also watching to see what would happen at a European Union summit at which leaders will apply more pressure on Greece to adopt deeply unpopular austerity measures in return for fresh funds to avert a sovereign default that could shake the global economy.

The Greek government survived a parliamentary vote of confidence earlier this week, which was seen as a first step toward a debt deal.

"We had the bounce yesterday after (Greece) finally managed to pass the vote of confidence but all that means is they can actually go ahead and try and get the austerity measures through, which may or may not occur," said Gavin Graham, president of Graham Investment Strategy.

"When you combine that with the news coming out today on manufacturing that's not good news."

At 11:36 a.m. (1536 GMT) the Toronto Stock Exchange's S&P/TSX composite index was down 180.23 points, or 1.38 percent, at 12,880.33, with nine of 10 sectors weaker.

The sell-off followed a move by the US Federal Reserve on Wednesday to cut its growth forecast for the world's biggest economy.

Husky Energy Inc, Canada's No. 3 integrated oil company, was another major decliner, falling more than 5 percent to C$26.67. It said on Wednesday it will raise C$1.2 billion ($1.24 billion) through public and private share offerings.

Toronto Stock Exchange operator TMX Group, up 2.3 percent to C$45.26, was one of the few stocks helping to offset the index's losses.

TMX rose after a consortium of Canadian banks and pension funds raised its hostile takeover bid for the operator of the Toronto Stock Exchange on Wednesday with a cash-and-stock proposal that nudged above a friendly takeover bid from London Stock Exchange.

Copyright Reuters, 2011