TSX sinks 2 percent, hit by earnings, commodities

TORONTO (Reuters) - Canada's main stock index dived as much as 2 percent on Tuesday, with energy and mining shares leading the retreat after a downgrade of five Spanish regions and lackluster U.S. corporate earnings rekindled worries about the global economy.

"It's everything. Everything is down. The mood in the United States has been pretty black. Everything is red across the board," said John Ing, president of Maison Placements Canada.

Energy stocks, already hit hard in the previous session, fell another 2.5 percent. Suncor Energy, one of the most heavily weighted decliners, dropped 2.64 percent to C$32.50. Fellow oil producer Canadian Natural Resources was another key decliner, tumbling 4.06 percent to C$29.53.

Oil and gas companies had fallen on Monday after Canada's shock weekend decision to block Malaysian state oil firm Petronas's C$5.17 billion bid for Progress Energy Resources Corp, raising concerns the government might also veto state-owned Chinese company CNOOC's C$15.1 billion takeover bid for oil producer Nexen Inc.

On Tuesday, lower oil prices were also pushing energy shares down as investors focused on the fragile world economy and its impact on demand for oil, copper and other commodities. The Toronto index's resource sectors tracked bullion and copper prices, which both hit six-week lows.

The index's materials group, home to miners, slid 2.33 percent. Goldcorp Inc was down 2.7 percent at C$42.20.

At mid morning, the Toronto Stock Exchange's S&P/TSX composite index was down 1.82 percent, or 225.24 points, at 12,178.30. It fell as much as 2.12 percent to 12,141.19 earlier in the day .

All 10 of the TSX index's 10 main groups were negative, with nine down 1 percent or more. Only seven stocks on the index eked out gains.

Soft earnings from major U.S. companies like DuPont, 3M, United Technologies also fueled worries over the economy of Canada's largest trading partner.

Meanwhile, a Moody's credit rating downgrade of several regions in Spain added to concerns over the euro zone, which were already heightened as Spanish Prime Minister Mariano Rajoy's government remained undecided on whether to seek a bailout.

The financial sector, the index's biggest group, was down 1.7 percent, led by Royal Bank of Canada, the decliner with the biggest impact on the index. RBC, which said on Tuesday it agreed to buy the Canadian auto finance and deposit business of Ally Financial for $4.1 billion, dropped 2.05 percent to C$56.81.

Toronto-Dominion Bank, which struck a deal to buy Target Corp's credit card portfolio, was 1.58 percent lower, at C$81.61.

The financial, energy and materials groups combined make up roughly 75 percent of the index's weight.

Canadian National Railway was down 1.31 percent, at C$85.93. The rail operator posted a modest increase in quarterly profit on Monday as revenues climbed for all its business segments, and affirmed its full-year forecast despite its caution over the economy.

(Additional reporting by John Tilak; Editing by Peter Galloway)

Source: http://news.yahoo.com/tsx-may-open-lower-corporate-earnings-weigh-122804506--finance.html

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