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Toronto stock market posts triple-digit loss after Greek debt downgrade

TORONTO - The Toronto stock market posted a triple-digit loss Tuesday, losing more than one per cent of its value after a ratings agency downgraded Greece's sovereign debt to junk status.

TORONTO - The Toronto stock market posted a triple-digit loss Tuesday, losing more than one per cent of its value after a ratings agency downgraded Greece's sovereign debt to junk status.

The move sent North American markets into a steep decline, with the S&P/TSX composite index down 134.23 points or 1.1 per cent at 12,146.74.

The Canadian dollar also plunged, losing 1.59 cents to 98.27 cents US as investors moved into the traditional safe haven of the U.S. greenback. At one point, the loonie fell as low as 98.21 cents US.

Ratings agency Standard & Poor's deprived Greece of an investment-grade rating on its bonds Tuesday, meaning the country would have to pay higher costs to borrow if it taps debt markets again.

German reluctance to fund the lion's share of a euro45-billion bailout of Greece is raising fears that the money may not be available by May 19, when euro8.5 billion in Greek bond payments come due.

Standard & Poor's also lowered Portugal's debt rating amid concerns about that country's ability to get a handle on its debt load. While Portugal has less debt than Greece, economists have focused on it as the next possible casualty if concerns over European economies spread.

"The moves today indicated to the market that the risk of contagion from Greece had increased and that the EU nations had not ring-fenced the risk that was emanating from Greece," said David Watt, senior fixed income and currency strategist at RBC Capital Markets.

On Wall Street, all the major indexes saw losses in the two per cent range. The Dow Jones industrial average lost 213.04 points or 1.9 per cent to 10,991.99, the S&P 500 fell 28.34 points or 2.3 per cent to 1,183.71 and the Nasdaq was down 51.48 points or two per cent at 2,471.47.

"This is a problem where one day it seems like it's solved and then the next day it's not, and it's just (creating) continued concerns about what the spillover effect is going to be on the other euro nations, such as Portugal and Ireland," said Kathryn DelGreco, vice-president at TD Waterhouse.

The price of oil followed stock markets lower as the U.S. dollar strengthened. The June crude contract on the New York Mercantile Exchange lost $1.76 to US$82.44 a barrel, sending the Toronto energy sector down 1.83 per cent. Shares in Suncor Energy Inc. (TSX:SU) lost 53 cents to C$33.91.

Meanwhile, the June bullion contract on the Nymex received a boost from the ongoing uncertainty overseas, rising $8.20 to US$1,162.20 an ounce. Shares in Barrick Gold Corp. (TSX:ABX) added 83 cents to C$41.43.

The base metals sector was the biggest decliner in Toronto, plunging 3.93 per cent as the May copper contract plummeted 16.45 cents to US$3.36 a pound. Shares in Teck Resources Ltd. (TSX:TCK.B) fell $2.18 or more than five per cent to C$41.05.

The Toronto financial sector lost 1.46 per cent as a U.S. Senate committee began to grill Goldman Sachs executives on the extent to which the investment bank benefited from the collapse of the housing market.

The TSX Venture Exchange fell 14.36 points to 1,658.49.

In U.S. economic data, the Consumer Confidence Index for April came in at 57.9, beating expectations and marking an improvement over the previous month. The monthly reading was also the best since August 2008.

In Canada, earnings season began in earnest after markets closed on Monday with Canadian National Railway Co. (TSX:CNR) reporting a $511-million profit during its first quarter, due mainly to higher freight volumes, a bigger fuel surcharge and increased freight rates. The results were offset in part by a stronger Canadian dollar. Despite the better-than-expected results, CNR shares lost $1.51 or 2.4 per cent to C$62.21.

Energy producer Nexen Inc. (TSX:NXY) also posted an improvement in its first quarter, saying it earned $185 million due to the rising price of oil. Investors seemed unimpressed, sending Nexen's shares down $1.08 or more than four per cent to $25.42.

Power producer TransAlta Corp. (TSX:TA) said its first-quarter net profits rose to $67 million, helped by fewer outages at its Alberta coal-fired plants. Its shares dropped 69 cents or more than three per cent to $21.31.

Sherritt International Corp. (TSX:S) stock slipped four cents to $7.99 after the resources company said it earned $59.7 million in the first quarter, a sharp contrast to the loss it experienced a year earlier.

And BlackBerry-maker Research In Motion unveiled a first look at its new smartphone operating system, set to debut next quarter, at its annual industry showcase in Orlando, Fla. It shares were down 28 cents at $72.59.

 
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