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TSX hits 4-year low as banks feel heat

19/11/08

TORONTO (Reuters) - Toronto Stock Exchange's main index sank to its lowest level in four years on Wednesday in a broad selloff led by key resource and financials issues on gloomy news from the banking sector.

The S&P/TSX composite index <.GSPTSE> closed down 345.17 points, or 3.9 percent, at 8,490.56, its lowest level since September 2004. Its previous 2008 low was 8,537.34, hit in late October.

Financials, which comprise about one third of the index's total weighting, slid 4.9 percent after Bank of Nova Scotia said late on Tuesday it would take a C$890 million pretax charge in the fourth quarter because of sliding securities valuations in volatile markets.

Scotiabank sank 5.2 percent to C$35.24, while Canadian Imperial Bank of Commerce fell 5.1 percent to C$48.29.

Elsewhere in the sector, Royal Bank of Canada dropped 5.4 percent to C$41.19 and Manulife Financial fell 6.2 percent at C$20.97.

"There's still write-downs going on so people are wondering where this financial crisis is going to end," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary.

"What everybody is focusing on now is not so much the write-downs from the initial phases of what's happened with the mortgage markets. They're looking at phase two, the losses in consumer loans, commercial and business loans."

Scotiabank's write-down followed U.S.-based Citigroup's announcement earlier this week that it would slash 52,000 jobs globally in a bid to restore its financial health.

Scotiabank is set to report earnings on December 2.

The energy group was off 3.8 percent as oil prices settled to $53.62 a barrel on a weak demand outlook amid a slowing economy, and rising crude oil inventories.

Gold prices gave back earlier gains and pressured the broader materials group, which dropped 4.3 percent. Barrick Gold Corp rose 2.9 percent at C$26.49, but Agnico-Eagle fell 11.9 percent to C$33.08 on stock dilution fears after it said it will raise US$252 million in a private placement.

($1=$1.25 Canadian)

(Reporting by Jennifer Kwan; Editing by Peter Galloway)

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