TORONTO -- Toronto's main stock market index tumbled more than 400 points Thursday morning, its biggest single-day loss since the dying days of the tech boom, as falling commodity prices and more credit woes sent investors fleeing.
The Toronto Stock Exchange's S&P/TSX composite index was down 432.59 points, or 3.3 percent, at 12,616.17, dropping well under its 2007 starting point of 12,908.39.
Investor nerves were not quickly calmed even though a group of financial institutions in Canada tried to soothe commercial paper market jitters by announcing they had agreed to roll over their third-party asset-backed commercial paper for 60 days and not make any margin calls during that period.
This followed news that Coventree Inc. , the largest nonbank player in Canada's asset-backed commercial paper market, said it had requested funding of about C$790 million ($730 million) on behalf of a number of conduits.
That brings its total liquidity request since Aug. 13 to C$1.6 billion.
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Redcorp Ventures Ltd. said repayments of C$102.2 million worth of its short-term investments managed by Coventree have been delayed.
"The bottom line is that it seems to be more a crisis of confidence in the financial sector and some of the products that they have created than in the economy and the fundamentals of the underlying economy," said Peter Chandler, a senior vice-president at Canaccord Capital.
"The markets will have to get a comfort level that the financial services sector is doing what it needs to do to re-establish that confidence."
All 10 of the TSX index's main groups were lower with resource-based stocks taking it on the chin. The materials group was down 7.1 percent and the energy sector was off 4.4 percent. Financial stocks were faring the best with a drop of only 0.9 percent.
Chandler said it was no surprise that the commodity-based shares were selling off as they have been some of the best performers over the past few years.
"These are some of the sectors that have been the strongest for the last several years, so therein lies a place, that if you have been a long-term investor, even though you are not at the highs, to lock in profits," he said.
U.S. crude oil was down more than 2 percent at $71.76 a barrel on the back of the drop in the global equities markets and easing concern that a a brewing hurricane would harm production in the Gulf of Mexico.
Gold was down $8.40 an ounce at $665 on a rising U.S. dollar.
Suncor Energy slipped C$3.76 to C$88.97 and Niko Resources dropped C$4.10 to C$79.70.
In the materials group, Potash Corp. of Saskatchewan fell C$8.77 to C$77.43, and Barrick Gold tumbled C$3.02 to C$31.23.
But the financial sector saw only a moderate hit. Royal Bank of Canada , the country's biggest bank, was off C$1.32 at C$50.57, and Bank of Montreal was down 43 Canadian cents at C$60.82. Canadian Imperial Bank of Commerce , which revealed its exposure to the subprime market last week, was up 27 Canadian cents at C$87.27.
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