Toronto stocks seen down in 2008 on U.S. economic woes

By Leah Schnurr

TORONTO (Reuters) - Canada's main stock market index is expected to show a loss this year for the first time in six years, amid continuing fallout from the credit markets crisis and the stumbling economy south of the border, a Reuters poll showed.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE is expected to end 2008 at 13,375, 3.3 percent above its close of 12,952.15 on Monday, according to the median forecast of 14 equities analysts polled last week.

The end-year forecast is down 3.3 percent from where the index ended 2007 at 13,833.06 while the median anticipates the index to be at 13,150 at the end of June. The TSX is off over 6.4 percent so far this year.

The forecasts were taken over the period March 10-14, before JPMorgan Chase bought Bear Stearns at the weekend in a move which sent shockwaves through financial markets on Monday.

Most analysts said they are expecting the year to end below where it started, amid continuing credit market troubles as well as concern over the outlook for the economy in the United States, Canada's biggest trading partner.

The year-end forecast would make for the first downturn Bay Street has seen since the current bull run began in 2003.

"If (global financial institutions) are going to be struggling and if we're going to have a credit crunch, which is a consequence, it's very hard to justify above-average economic growth and earnings growth in that environment," said Elvis Picardo, investment strategist at Northern Securities Inc., in Vancouver.

"We've been thinking that this mess would be confined south of the border but that hasn't really been the case and I think that's what's caused a lot of concern in Canada."