TORONTO - The Toronto stock market tumbled nearly 200 points Monday as investors continued to sell off stocks in the wake of a disappointing read on U.S. employment last week which reinforced fears that the U.S. economy is slowing.
The S&P/TSX composite index dropped 199.25 points or 1.47 per cent to 13,318.66, with the decline led by resource and financial stocks while the TSX Venture Exchange declined 41.07 points to 2,014.55.
"I think what people are forgetting is nobody ever expected this to be a strong recovery," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.
"Everyone should have been expecting a slow, sluggish recovery. That's exactly what we have got and it's no surprise that hiring takes a pause every now and then."
Falling oil helped push the Canadian dollar down 0.26 of a cent to 101.96 cents US.
The loonie also dipped amid indications of a slowing housing sector as Statistics Canada reported that the value of building permits fell 21.1 per cent to $5.3 billion in April after increases in February and March. The non-residential and residential sectors both declined in April, with Ontario posting the largest decrease.
Indications of slower U.S. growth depressed crude prices again after the U.S. Labour Department reported on Friday that the economy generated only 54,000 jobs during May, a third of what was anticipated. The data prompted renewed speculation that the U.S. Federal Reserve will maintain interest rates near zero per cent for longer than previously thought.
Markets were also depressed by other data last week showing a sharp deceleration in expansion in the American manufacturing sector.
Investors also worry that the loss of momentum in the U.S. is being echoed elsewhere, particularly in China where authorities are trying to slow the economy in order to deal with high inflation, particularly high food prices.
The TSX energy sector was down 2.14 per cent as the July crude contract on the New York Mercantile Exchange declined $1.21 to US$99.01 a barrel as traders also took in speculation that the OPEC cartel could decide to increase production at a meeting on Wednesday. OPEC officials have said that they believe oil prices are too high and threaten global economic recovery.
Canadian Natural Resources (TSX:CNQ) gave back $1.06 to C$39.69 while Suncor Energy (TSX:SU) declined 85 cents to $38.75.
Cenovus Energy Inc. (TSX:CVE) plans to accelerate oil project development over the next decade, investing an average of up to $3.5 billion a year as it seeks to increase production to about 500,000 barrels per day by the end of 2021. Its shares were down 95 cents to $34.01.
Financial stocks also weakened with TD Bank (TSX:TD) $1.48 lower to $80.21 while Manulife Financial (TSX:MFC) was down 19 cents to $16.26.
Mining stocks and base metal prices lost early momentum with the July copper contract on the Nymex added one cent at US$4.14 a pound. The base metals sector was down 1.77 per cent as Teck Resources (TSX:TCK.B) dropped $1.80 to C$47.71 while HudBay Minerals (TSX:HBM) lost 53 cents to $14.17.
Gold stocks also gave up early gains even as worries about the global economy pushed the metal higher for a second day and the August bullion contract rose $4.80 to US$1,547.20 an ounce. Kinross Gold Corp. (TSX:K) lost 28 cents to C$15.29 while Goldcorp Inc. (TSX:G) faded 57 cents to 447.41.
The negative showing on the TSX followed a two per cent slide last week and left the main index about 125 points below where it started the year.
Bank stocks helped depress New York markets amid concern that the U.S. Federal Reserve may require them to set aside more cash to cover potential losses.
The Dow Jones industrials added to last week's slide of more than two per cent, falling 61.3 points to 12,089.96.
The Nasdaq composite index declined 30.22 points to 2,702.56 while the S&P 500 index was off 13.99 points to 1,286.17.
On the corporate front, Sino-Forest Corp. (TSX:TRE) said it has hired a law firm to address "inaccurate, spurious and defamatory" allegations by Muddy Waters Research that it wildly exaggerated its assets and fabricated sales transactions. Shares in the owner and manager of tree plantations in China plunged 73 per cent last week in the wake of the report. Shares revived somewhat Monday, running up 87 cents or 16.63 per cent to $6.10 after earlier advancing as high as $8.53.
Five per cent more passengers travelled on Air Canada (TSX:AC.B) jets in May compared to the same month a year earlier, while competitor WestJet (TSX:WJA) saw a 3.1 per cent year-over-year increase as the major airlines gear up for the busy summer travel period. Air Canada shares were off five cents at $2.10 while WestJet dipped 25 cents to $15.
Tim Hortons Inc. (TSX:THI) has come to an agreement with former president and CEO Don Schroeder that will have him stay with the company for at least the next two years as adviser for the company's sustainable farming partnership. Its shares were down $1.16 at $43.31.
Shares in Compton Petroleum Corp. (TSX:CMT), a Calgary-based oil and natural gas company, plunged 51 per cent after it said it has struck a deal to reduce its debt, raise $50 million in new financing and consolidate its existing common shares on a 200-for-one basis. Its shares fell 11.5 cents or 51 per cent to 11 cents.
Shares in Wi-LAN Inc. (TSX:WIN) fell 51 cents to $6.76 as the technology patent company said that its first-quarter net earnings rose to $19.8 million from $1.1 million a year-ago. Revenues were up 65 per cent to $26.3 million.
