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TSX falls 2 percent as banks, energy stocks sink

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

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index fell on Tuesday to a two-week low, again weighed down by bank and energy company shares as crude oil prices tumbled and investors globally worried about negative interest rates.

The drop in oil prices was the major factor weighing on the market, according to Bryden Teich, associate portfolio manager at Avenue Investment Management.

U.S. crude prices settled at $27.94 a barrel, down 5.89 percent.

Financial stocks across the world have suffered, Teich added, as the "whole banking model gets flipped on its head" by negative interest rates concerns.

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The most influential movers on the index were its heavyweight banks, with the financials group down 2.4 percent overall, while the energy sector tumbled 4.7 percent, extending Monday's losses.

Royal Bank of Canada (Toronto:RY.TO - News) fell 2.4 percent to C$67.64, while Suncor Energy Inc (Toronto:SU.TO - News) lost 4.5 percent to C$29.95.

Fortis Inc (Toronto:FTS.TO - News) shares plunged 10.3 percent to C$37.14 after the utility said it would buy a U.S. power transmission company.

The added leverage that Fortis will take on weighed on the stock, according to Teich.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) closed down 252.75 points, or 2.02 percent, to 12,282.65. It was the index's lowest close since Jan. 25.

Six of the index's 10 main groups were lower.

Shares in Agrium Inc (Toronto:AGU.TO - News) fell 0.6 percent to C$116.31 after the fertilizer and farm products retailer forecast lower-than-expected profit for 2016, blaming weak prices.

The overall materials group, which includes precious and base metals miners and fertilizer companies, lost 3.2 percent.

Among stocks that advanced, Canadian Pacific Railway Ltd (Toronto:CP.TO - News) rose 1.8 percent to C$172.54. It plans to seek support from Norfolk Southern Corp's (NYSE:NSC - News) shareholders to push the U.S. railroad's board to engage in takeover talks.

Cineplex Inc (Toronto:CGX.TO - News) rose 4.4 percent to C$48.75 after the movie theater operator reported better than expected fourth quarter revenue and raised its dividend.

(Additional reporting by Alastair Sharp; Editing by W Simon and Chris Reese)