Roundup: Toronto stocks drop as oil dips further down

Canada's main stock market in Toronto went further down Tuesday after oil prices dived back to 28 U.S. dollars a barrel over global excess supply.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index lost 252.75 points, or 2.02 percent, to close at 12,282.65 points. Five of the TSX index's eight main sub-sectors went down.

The International Energy Agency says oil supply is set to outpace demand this year, keeping a lid on any expected price increases. The organization, which advises countries on energy policy, said in its monthly report Tuesday that global excess supply may reach 2 million barrels per day during the first quarter, and a further 1.5 million barrels a day in the second quarter. Further stock-building of 300,000 barrels a day is forecast in the second half of the year.

The U.S. WTI for March delivery moved down 1.75 U.S. dollars to settle at 27.94 dollars a barrel on the New York Mercantile Exchange, while Brent crude for April delivery decreased 2.56 dollars to close at 30.32 dollars a barrel on the London ICE Futures Exchange.

TSX's energy and mining groups led the decline, down 4.72 percent and 7.10 percent respectively. Vancouver-based mining company First Quantum Minerals Ltd. lost 10.84 percent to 3.29 Canadian dollars per share, and Calgary-based energy producer Encana Corporation retreated 8.92 percent to 5.31 Canadian dollars per share.

Heavyweight financial stocks were hammered by 2.37 percent, with Manulife Financial Corporation losing 3.84 percent, Royal Bank of Canada shedding 2.38 percent and Toronto-Dominion Bank giving away 2.39 percent.

St. John's-based utility Fortis Inc. lost 10.25 percent to 37.14 Canadian dollars a share after the company said it would buy a U.S. power transmission company. Fortis is an investor-owned distribution utility in Canada, serving more than 2.4 million gas and electricity customers. Utilities decreased 4.50 percent as a group.

Canadian equity markets have been in a slump so far this year after a lacklustre 2015. Several factors have kept investors in a selling mood, including falling crude oil prices, waning growth in Asia and increased risk of recession in other major economies if market volatility takes a toll on business confidence and investment.

"With Chinese markets closed for the Lunar New Year holidays, the only driver of the market continues to be fear of a slowdown in the global economy," said Michael J Smith, a Toronto currency expert at AFEX, a global non-bank provider of foreign currency services.

Overnight Japanese stocks were down 5.4 percent and in Europe investors continue to sell financial stocks expressing concern about the health of European banks.

The Euro is a little stronger Tuesday morning despite a poor showing of German Industrial Output which fell 1.2 percent in December, the largest Euro economy ended 2015 with some weakness. The European Central Bank may look at this and decide to add more stimulus to the economy a move which should push the Euro lower.

"With the lack of other factors in play at the moment the loonie may go back to tracking the oil price to get some direction, it is still worthwhile to keep an eye on it," said Smith.

The Canadian dollar was traded mildly higher at 0.7205 U.S. dollar, compared with Monday's closing rate of 0.7177 U.S. dollar. Enditem