TORONTO - Rising worries about an economic recovery sent the Toronto stock market on a widespread tumble mid-morning Monday.
The main S&P/TSX composite index dropped 352.1 points or 3.4 per cent to 9,935.9 following a 166-point surge on Friday.
But the index fell 3.35 per cent on the week as traders questioned whether there's still momentum in the the spring rally that began in early March, three and a half months ago.
That was called further into question Monday morning after the World Bank said that the world economy will shrink 2.9 per cent in 2009. That estimate is worse than its previous forecast for a 1.7 per cent decline.
The rally had sent the TSX up as much as 41 per cent since March 9.
Falling commodity prices in particular punished the TSX in early trading, with the energy sector 4.6 per cent lower as the July crude contract on the New York Mercantile Exchange slid $2.14 to US$67.41.
That was well off a seven month high of US$73 a barrel from the middle of last week. Sector heavyweight EnCana Corp. (TSX:ECA) fell $2.28 to $55.73.
A strong U.S. dollar helped send the Canadian dollar down 1.24 cents to 86.86 cents US.
It was also the end of an era for one of Canada's oldest companies as Nortel Networks Corp. (TSX:NT) shares were delisted from the TSX.
The word came after the former Canadian tech heavyweight signed a deal to sell its most of wireless business to Nokia Siemens Networks B. V. for US$650 million and said it's in advanced talks to sell the rest of its operations, winding down a company with a 127-year-old history in Canada. Nortel has been restructuring under court protection from creditors.
Nortel shares closed Friday at 18.5 cents -- a far cry from the high of $124.50 from July 2000 when the company accounted for more than one-third of the value of all the companies listed.
The TSX Venture Exchange gave back 21.43 points to 1,097.37.
U.S. markets were also lower after losing ground last week.
The Dow Jones industrial average fell 120.2 points to 8,419.5, after giving up almost three per cent last week.
The Nasdaq composite index lost 40.5 points to 1,786.97 while the S&P 500 dropped 16.75 points to 904.5.
No major U.S. economic reports are due Monday. But later in the week, traders will focus on data on new and existing home sales, durable goods orders, gross domestic product and personal incomes and spending.
The Toronto base metals sector was down 6.25 per cent as the price of copper in New York fell seven cents to $2.18 a pound.
Teck Resources Limited (TSX:TCK.B) shares were down $1.03 to $17.80 after it said Friday that it expects its 2009 coal sales to be at the upper end of its guidance for 18 million to 20 million tonnes and cancelled planned temporary production shutdowns at several mines. The company said it expects second quarter sales of about five million tonnes and third quarter sales in excess of six million tonnes.
Anglo-Swiss mining giant Xstrata PLC has made a preliminary approach seeking a merger with American rival Anglo American.
Anglo American confirmed the move made by Xstrata over the weekend, saying the "situation is at a very preliminary stage and there is no certainty that a transaction will be forthcoming."
The August bullion contract on the Nymex was down $13.80 to US$922.40 an ounce, taking the gold sector down 3.4 per cent. Barrick Gold Corp. (TSX:ABX) lost $1.28 to $37.36.
The financial sector fell 3.25 per cent with Royal Bank (TSX:RY) down 77 cents to $45.23.
Manulife Financial Corp. (TSX:MFC) shares tumbled $2.86 or 12.7 per cent to $20.39 after The Ontario Securities Commission said it was investigating the insurer over what it told investors about the risks of its guaranteed fund business. Manulife says it received an enforcement notice from staff of the provincial regulator this week in connection with its disclosure before March of the risks in its variable annuity guarantee and segregated funds business.
In other corporate news, Linamar Corp. (TSX:LNR) gets multi-year contract to supply European automaker. Production is scheduled to begin in 2011. Linamar expects annualized sales to be above C$200 million when program reaches full production in 2014. Its shares rose a penny to $10.51.
European bourses were also lower with London's FTSE 100 index down 1.9 per cent, Frankfurt's DAX down two per cent as a closely watched survey from the Ifo institute said that business confidence in Germany, Europe's largest economy, dropped to a new all-time low in June. But expectations for the future continued to improve.
The Paris CAC 40 backed off 2.5 per cent.
Earlier in Asia, optimism about China's economic outlook helped shares advance, with Japan's Nikkei 225 stock average closing up 40.01 points, or 0.4 per cent, to 9,826.27, and Hong Kong's ending 138.62 points, or 0.8 per cent, higher at 18,059.55.
