CANADA STOCKS-TSX cuts losses after plunge to 23-month low

Tue Oct 4, 2011 5:03pm EDT

 * TSX ends down 73.93 points, or 0.66 pct, at 11,177.91
 * Six of 10 index sectors weaker, energy ends flat
 * Hits November 2009 low, falls 24 pct since 2011 highs
 (Adds traders citing talk of a euro-zone finance minister
agreement)
 By Claire Sibonney
 TORONTO, Oct 4 (Reuters) - Toronto's main stock index
plunged to a 23-month low on Tuesday but recovered most of the
day's losses as a late-day bargain-hunting rush and signs of
more U.S. stimulus measures helped offset fears over Europe's
debt crisis.
 Traders also cited talk that European finance ministers had
agreed to prepare action to safeguard their banks as another
reason for the snap-back on stock markets in late dealings.
 The TSX failed to turn positive, but U.S. stock indexes
were swept higher in a dramatic rally heading into the close.
[.N]
 The TSX had a long way to come back after dropping more
than 3 percent early in the day as the possibility of another
global recession sparked a sell-off that hit financial shares
and commodities hard. The day's low marked a 19 percent fall
since the start of the year and a 24 percent decline from the
2011 high the index reached in March.
 Battered energy shares closed slightly higher but the
index's other two heavyweight groups, financials and materials,
both ended 1.3 percent lower.
 "A lot of the uncertainty and a lot of the volatility is
being generated out of Europe," said Stephen Wood, chief
investment officer for North America at Russell Investments in
New York, adding that there were also concerns about soft U.S.
data and slowing growth in China.
 "It's not a market situation, it's a political situation
... investors are assuming the worst. There are a lot of very
bad scenarios that Europe represents and it's not clear which
one is likely to happen."
  Greece appeared more likely to default on its debt after
euro-zone finance ministers postponed a vital aid payment to
Athens until mid-November. [ID:nL5E7L419D]
 The impact of a possible default on the global economy
and particularly on the banking sector worried markets after EU
ministers said they were reviewing the size of private-sector
involvement in a second bailout package for Greece.
 Among the heaviest decliners on the TSX were gold mining
shares, which sold off 3.4 percent on sagging bullion prices.
[GOL/]
 Goldcorp (G.TO) was down 3.8 percent at C$45.94, and
Barrick Gold (ABX.TO) lost 3 percent to C$47.14.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE ended down 73.93 points, or 0.66 percent, at
11,177.91. The day's low was 10,848.19, the weakest level since
November 2009. Six of the 10 index sectors were down.
 Financial shares dropped in sympathy with battered European
banks, despite Canadian banks' limited exposure to European
debt. Markets were focused on collapsing confidence in
French-Belgian municipal lender Dexia SA (DEXI.BR), which
became the first European bank to have to be bailed out due to
the euro zone's sovereign debt crisis. [ID:nL5E7L419D]
  Royal Bank of Canada (RY.TO) lost 1.8 percent to C$45.95,
Toronto-Dominion Bank (TD.TO) was down 0.7 percent at C$71.14,
and Bank of Nova Scotia (BNS.TO) was off 1.8 percent at
C$50.20.
  "In this market you don't know how far stupidity will
carry on," said Ron Meisels, technical analyst and president of
Phases & Cycles, pointing to the next support level around
10,700.
 "We're probably completing a leg of the bear market that
started possibly as early as April but certainly in July, and
if we do compete this here than maybe there will be some
bargain-hunting."
 Looking to the example of the market crash in 1987, Meisels
noted that it took more than eight months for stocks to turn
around, and said investors might want to use any near-term
rallies to generate cash.
 Helping to put a bottom on the market's slide on Tuesday
was a speech by U.S. Federal Reserve Chairman Ben Bernanke, who
said the central bank was ready to act again to support the
economy. [ID:nN1E7930IZ].
 Some investors said Bernanke's statement left the door open
to another round of quantitative easing policies, but
speculated markets still have further to fall before more U.S.
stimulus, or a broader resolution in Europe, is announced.
 Among the lead gainers on the index, Teck Resources
(TCKb.TO) surged 8 percent to C$30.99, and pipeline company
Enbridge (ENB.TO) rose 2.4 percent to C$33.36.
 ($1=$1.06 Canadian)
 (Reporting by Claire Sibonney; editing by Peter Galloway)
















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