TORONTO - The Toronto stock market tumbled almost 300 points Tuesday in the face of U.S. economic data showing that high oil prices are wreaking havoc with corporate earnings, house prices continue to plunge and consumer confidence worsens.
Toronto's S&P/TSX composite index dropped 282.22 points to 14,409.6.
New York markets also finished lower, but losses were limited by a strong showing in the financial sector.
"Investors are nervous, they're anxious and I think they've just decided that maybe it's best to sit on the sidelines for awhile -- at least with part of their portfolio,'' said Fred Ketchen, manager of equity trading at Scotia Capital..
"That's what people do when they get nervous -- they run for cover and there seems to be some running for cover here today.''
It's been a tough week for the TSX as oil stocks have been under the gun since China announced it was raising fuel prices and bank stocks have given up ground on worries about more writedowns and downgrades of bond insurers.
The TSX has fallen about 4.3 per cent since hitting a record closing high of 15,073 last Wednesday.
The TSX Venture Exchange lost 43.93 points to 2,559.68, while the Canadian dollar was ahead 0.42 of a cent to 98.86 cents U.S.
New York's Dow Jones industrials moved down 34.93 points to 11,807.43.
The Nasdaq composite index was off 17.46 points to 2,368.28 while the S&P 500 index slipped 3.71 points to 1,314.29.
UPS Inc. shares fell $4.00 to US$62.26 after it said late Monday that slowing economic growth and high fuel costs mean that quarterly earnings per share will come in at 83 to 88 cents US, down from the 97 cents to $1.04 previously anticipated.
In another sign of economic damage wrought by higher oil, Dow Chemical Co. plans to raise its prices for the second time in a month to deal with what it calls a relentless rise in costs of energy and related raw materials. Its shares fell $1.04 to US$36.58.
There was also more glum news from the U.S. housing sector as the Standard & Poor's/Case-Shiller home price index dropped in April at the fastest rate in its two-decade history. The index was down 15.3 per cent from a year earlier, with prices tumbling to levels not seen in nearly four years.
And the U.S. Conference Board's index of U.S. consumer confidence index fell to 50.4 this month, down from 58.1 in May, far lower than economists expected.
"This whole commodity thing and earnings announcements (show) the slowdown is really with us and will provide us with some headwinds for some time to come,'' said Paul Vaillancourt, director of asset allocation, Franklin Templeton Managed Solutions in Calgary.
"What surprises me is how the market seems to be gyrating and unnerved by such news because anyone who has been looking at this has been looking at a definite slowdown (of) the world economy.''
Equity trading was cautious ahead of a scheduled announcement Wednesday on interest rates from the U.S. Federal Reserve. Economists expect the central bank to keep its policy rate at a four-year low of two per cent.
Inflation concerns increased as oil prices stayed high. The August crude contract on the New York Mercantile Exchange ticked 26 cents higher to US$137 a barrel after earlier topping US$138 amid Mideast tensions and Nigerian supply disruptions.
"The big fear is that these prices keep on moving up, then oil . . . will push us into some form of stagflationary slump and then we'll be in bigger trouble,'' added Vaillancourt.
The TSX energy sector dropped 3.2 per cent. EnCana Corp. retreated $2.02 to $91.20 and Canadian Natural Resources lost $3.60 to $100.10.
Suncor Energy Inc. shares fell $3.67 to US$61.31 after it said it is restarting production at one of its two oilsands upgraders after a maintenance shutdown.
The industrials sector lost two per cent as Bombardier Inc. declined 51 cents to $7.29.
Bank stocks had been positive during the morning but turned negative during the afternoon, losing 0.6 per cent as Bank of Montreal gave back 59 cents to $42.31 and National Bank fell $1.65 to $50.39.
BCE Inc. moved 64 cents higher to $37.22, after Industry Canada approved late Monday the proposed $42.75-a-share takeover of the country's biggest telecommunications provider by an investor group led by the Ontario Teachers' Pension Plan. This was the final regulatory hurdle which had to be overcome by June 30 under the arrangement with the banks funding the heavily leveraged buyout.
Crystallex International Corp. soared 43 cents or 66 per cent to $1.08 after it started talks with Venezuela's Ministry of the Environment over how the company could modify its Las Cristinas gold project to obtain a permit. The ministry last month refused to issue a permit for open-pit mining.
Gold prices headed higher with the August bullion contract closing up $4.40 to US$891.60 an ounce.
On the TSX, declines beat advances 989 to 592 with 228 unchanged as 435.9 million shares traded worth $8.2 billion.
