TORONTO - The Toronto stock market racked up a sharp decline Monday, pushing its main index close to correction territory as commodity prices continued to fall on concerns that the global economic recovery has largely stalled.
The S&P/TSX composite index fell 144.28 points to 12,939.72, amounting to a downturn of just under 10 per cent from the 2011 intraday highs reached Mar. 7. It was the TSX's first close below 13,000 since late November 2010.
"Our expectations of where things were going to go from an economic standpoint just became a little unrealistic for the short term," said Gareth Watson, vice-president investment management and research, Richardson GMP Ltd.
"The market has been caught off guard with these weaker U.S. economic data points that have come out in the second quarter. They were hoping that they would show some more momentum behind Q1. And certain data points in particular, like employment, has really thrown a lot of stuff up in the air."
The TSX Venture Exchange dropped 18.64 points to 1,916.29.
The Canadian dollar closed up 0.16 of a cent to 102.38 cents US.
All TSX sectors were lower with the energy component leading decliners, down 1.86 per cent as oil prices fell to below $98 a barrel Monday, extending a big loss from Friday after a report said Saudi Arabia plans to boost its crude production.
The July crude contract on the New York Mercantile Exchange lost $1.99 to US$97.30 a barrel.
Saudi newspaper al-Hayat reported Friday that the country will increase production 13 per cent, or about 1.14 million barrels per day, to boost global supplies and help lower prices. Earlier last week, the Organization of Petroleum Exporting Countries failed to reach consensus to raise output and left the cartel's production quotas unchanged.
Canadian Natural Resources (TSX:CNQ) declined 73 cents to C$38.61 while Suncor Energy (TSX:SU) slipped 48 cents to $37.59.
The base metals sector moved down 0.72 per cent as metal prices fell for a fourth day, with the July contract on the Nymex down two cents to US$4.03 a pound. HudBay Minerals (TSX:HBM) lost 19 cents to C$13.36 and Taseko Mines (TSX:TKO) was off 14 cents at $4.38.
Gold stocks fell alongside lower bullion prices, down $13.60 to US$1,515.60 an ounce. Barrick Gold Corp. (TSX:ABX) faded 32 cents to C$42.30 and Goldcorp Inc. (TSX:G) lost $1.15 to $45.05 .
The telecom sector was also a major weight, down 1.51 per cent with Rogers Communications (TSX:RCI.B) the big decliner, down 50.5 cents at $35.83.
Earlier Monday, the the head of Canada's federal telecom and broadcast regulator said that Ottawa should rethink its communications policy and draft a new all-encompassing act more in tune with the new digital world. The call for sweeping changes from CRTC chairman Konrad von Finckenstein comes as the federal government is in the middle of a review of foreign ownership rules in the telecommunications industry.
The financial sector also depressed the TSX as Scotiabank (TSX:BNS) lost 68 cents to $56.90.
The TSX fell 3.2 per cent last week on top of a two per cent slide the previous week. Investor confidence in the U.S. economy has sharply deteriorated over the last month amid a variety of miserable economic data, including slowing expansion in manufacturing and a jobs report for May that widely missed expectations.
Pessimism deepened last week after the U.S. Federal Reserve's latest cross-country survey of economic conditions showed that the economy slowed in several U.S. regions this spring and the Dow Jones industrials lost 1.6 per cent.
A slowing Chinese economy also concerns investors. Data released Monday showed a dip in bank lending and traders awaited inflation figures due out Tuesday that could show the consumer price index surging to more than six per cent. The Chinese government has been trying to slow the economy to deal with high levels of inflation, particularly high food prices.
Traders also took in the formal launch of a takeover bid for the TMX Group Inc. (TSX:X) by Maple Group Acquisition Corp.
The official submission from a newly expanded Maple Group offers to buy 70 per cent of TMX for $48 per share, valuing TMX at about $3.7 billion. The Maple group hopes that will be enough to make a case for its offer instead of a transatlantic merger planned by the owners of the Toronto and London stock exchanges.
The bid comes a day after Maple Group added four additional financial companies to the mix. The new investors are Desjardins Financial Group, Dundee Capital Markets (TSX:DCM), GMP Capital Inc. (TSX:GMP) and Manulife Financial (TSX:MFC). TMX shares were up 39 cents to $44.19.
New York markets were little changed as the Dow Jones industrial average inched up 1.06 points to 11,952.97.
The Nasdaq composite index slipped 4.04 points to 2,639.69 and the S&P 500 index added 0.85 of a point to 1,271.83.
Investors also took in a fresh development in the European government debt crisis.
Standard & Poor's cut Greece's credit rating, saying that risks associated with the country's financial bailout are rising, "given the increasingly complicated political environment in Greece coupled with its current difficult economic climate."
In other corporate news, talk continued between Air Canada (TSX:AC.B) and its customer service and sales staff to head off a strike threat, but there was no sign of a settlement. Both sides hope they can hammer out a deal before a union imposed strike deadline of 12:01 a.m. Tuesday. Air Canada shares slipped 15 cents to $1.79.
Shares in convenience store operator Alimentation Couche-Tard Inc. (TSX:ATD.B) gained 33 cents to $26.91 after it said it will acquire up to 322 additional U.S. retail sites from ExxonMobil (NYSE:XOM) for an undisclosed price. The locations will become part of the Montreal-area company's Circle K retail network and will continue to sell Mobil-branded fuel.
VF Corp., whose brands include Wrangler, Nautica and The North Face, said Monday that it will buy boot and clothing maker Timberland Co. for more than US$2.2 billion. VF is offering US$43 for each Timberland share, a premium of 43.4 per cent to the latest Timberland closing price. VF shares ran up $9.21 to US$101.01.
