Losses continued to pile up on the Toronto stock market Monday morning after a wild week that saw global markets plummet on downbeat predictions for the U.S. economy and a growing mess in debt-laden European countries.
Resource stocks led weakness as prices for oil and copper continue to fall on demand worries and a rising U.S. dollar as investors continue to shed risk and buy into the safe haven status of U.S. Treasurys.
The S&P/TSX composite index tumbled 157.45 points or 1.4 per cent to 11,305.42, on top of a 7.5 per cent drop last week.
The Canadian dollar fell 0.49 of a cent to 96.65 cents US, adding to last week’s five cent retreat.
The Dow Jones industrial average rose 45.87 points to 10,817.15. The Nasdaq composite index fell 29.45 points to 2.453.78 while the S&P 500 index lost 2.31 points to 1,134.12.
The TSX plunged to its lowest level in a year last week, while the Dow lost almost 6.5 per cent.
Markets had initially opened higher on word from European officials over the weekend that Germany and other rich EU countries are pushing for a new strategy to solve the debt crisis and help Greece avoid defaulting on its debt.
One proposal on the table is to ask banks and other private institutions that hold Greek bonds to take a far bigger loss on those holdings, slashing Athens’ debt. Many observers have said Greece will not manage to pay down its debt even after taking into account the reduction agreed in July.
The new strategy could also see the size of the continent’s euro440-billion bailout fund multiplied several times. However, analysts said more specifics will have to emerge before a rally gains traction.
Commodities posted further losses after a higher U.S. dollar sent prices reeling last week with oil tumbling almost 10 per cent while copper fell more than 16 per cent.
The energy sector fell 1.3 per cent after falling about 10 per cent last week. The November crude contract on the New York Mercantile Exchange lost early traction and declined $1.69 to US$78.16 a barrel. Suncor Energy lost 25 cents to $26.07 and Canadian Natural Resources gave back 42 cents to $29.81.
The base metals component led decliners, down over four per cent while the December copper contract on the Nymex dipped nine cents to US$3.19 a pound. Teck Resources fell $1.02 to $29.71 while First Quantum Minerals lost 34 cents to $13.37.
The gold sector was down 1.7 per cent as bullion prices also headed lower with the December contract down $45.40 to US$1,594.40 an ounce. Barrick Gold Corp.was down 82 cents to $46.91.
The financials sector was also a major source of weakness, down one per cent with Royal Bank down 52 cents to $45.57.
Asian markets were negative as South Korea’s Kospi fell 2.6 per cent, Hong Kong’s Hang Seng lost 1.5 per cent and Australia’s S&P/ASX 200 receded one per cent.
Mainland China’s benchmark Shanghai Composite Index dropped 1.6 per cent to its lowest close in 14 months while the smaller Shenzhen Composite Index lost 1.6 per cent.
London’s FTSE 100 index dipped 0.17 per cent, Frankfurt’s DAX was up 1.28 per cent and the Paris CAC 40 rose 0.32 per cent.
In corporate news, SSQ Financial Group will purchase the Canadian AXA Life Insurance operations from Intact Financial Corp. for $300 million. The division will be renamed as SSQ Insurance Inc. and become a unit of SSQ.
Valeant Pharmaceuticals International Inc. is raising its offer for Afexa Life Sciences Inc. to about $78 million or 85 cents a share in the escalating battle for the Cold-FX maker. It said that’s a 20 per cent premium from its earlier offer. The announcement comes after Paladin Labs Inc. boosted its offer for Afexa to $74.5 million, or 81 cents per share, on Sunday. Valeant shares rose 32 cents to $39.68, Afexa shares gained 10 cents to 85 cents while Paladin shares were unchanged at $37.36.
Detour Gold Corp. said Monday it has agreed to buy Trade Winds Ventures Inc., its neighbour and a partner in the Detour Lake area of northeastern Ontario for $84 million in a cash-and-shares deal. Detour shares declined $1.08 to $30.94.