TSX falls to two-and-a-half-year low as financials, energy stocks slide

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch
By Fergal Smith

By Fergal Smith TORONTO (Reuters) - Canada's main stock index slumped on Wednesday to a 2-1/2-year low as investors used an early rally to reduce exposure to stocks and crude oil prices fluctuated on rising U.S. inventories. The index had climbed initially after positive Chinese trade data supported sentiment. "People don't want stocks these days and they're taking every opportunity to sell them," said John Kinsey, portfolio manager at Caldwell Securities. Heavyweight financial stocks fell 2.1 percent, including a 2.5 percent drop in Royal Bank of Canada to C$69.15. Financials are "taking a good hit" amid concern that the impact of the oil price shock will get worse for the banks in 2016, according to Kinsey. Enbridge Inc dropped 3.8 percent to C$42.82, while Suncor Energy Inc was down 3.4 percent at C$31.33. The overall energy group fell 1.9 percent. Brent crude fell below $30 a barrel for the first time since April 2004 as growing inventories of oil in the United States stoked market fears about demand. Bombardier Inc fell 4.1 percent to C$1.17. The company said it was ending a decades-long tie-up with a partner in the Middle East for business jets sales and separately canceling two dozen firm orders for its larger Global business jets. The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed down 203.49 points, or 1.64 percent, to 12,170.41. Eight of the index's 10 main groups were in negative territory. Railway stocks were also a drag, including a 2.7 percent drop in Canadian National Railway Co to C$72.90. Among the gainers, Shaw Communications Inc rose 5.3 percent to C$24.70. The company said it would sell its media unit to Corus Entertainment Inc for C$2.65 billion ($1.9 billion), gaining funding for its Wind Mobile purchase. Magna International Inc rose 2.3 percent to C$51.69 after the company said it expected sales in its auto parts manufacturing business to rise about 15.7 percent this year. The materials group rose 0.2 percent as mining stocks benefited from safe-haven demand for gold. Spot gold was up 0.6 percent at $1,093.25. (Reporting by Fergal Smith; Editing by James Dalgleish and Leslie Adler)