TSX drops by 351 points - Action News
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TSX drops by 351 points

The Toronto stock market took a triple-digit dive Thursday amid speculation that several banks with global operations including a Canadian institution face credit downgrades.
The Dow Jones average also fell by triple digits Thursday. (Stan Honda/AFP/Getty)

The Toronto stock market took a triple-digit dive in early afternoon tradingThursday amid speculation that several banks with global operations including a Canadian institution face credit downgrades.

Bloomberg reported that Moodys Investors Service was poised toannounce the downgradesof as many as 17 lenders, including RBC,and securities firms after markets closed.

Also weighing on the TSX was a drop incommodity pricesonreports from three of the world's largest economies showing a slowdown in manufacturing.

The S&P/TSX closed down351.02 points, or three per cent,to 11,408.32,its biggest one-day drop since November 2011.

The Canadian dollar shed 0.97 of a cent to 97.15 cents US.

Wall street markets also fell, with the Dow Jones losing 250.82 points, or two per cent,to 12,573.57, the S&P 500 down 30.18 points, or 2.23 per cent,to 1,325.51 and the Nasdaq losing 71.36 points, or 2.44 per cent,to 2,859.09.

Appetite for stocks was dented by the results of a monthly HSBC survey which showed that manufacturing in China, the world's No. 2 economy, has continued to contract. China's growth has been a pillar of the global economy in recent years, so its slowdown has been of particular concern to investors.

In the 17-country eurozone, the equivalent manufacturing survey, called the purchasing managers' index, fell to 44.8 points in June from 45.1 the previous month. A number below 50 indicates contraction. A related survey on the services sector also showed declining activity, suggesting a drop in GDP in the second quarter.

Meanwhile, in the U.S., the Philadelphia branch of the Federal Reserve reported that manufacturing slumped this month, pulled down by drops in new orders and shipments. Economists had expected no change in the manufacturing index.

August gold prices dropped sharply, by $50.30 to $1,564.50US an ounce, while July copper prices lost nine cents to $3.30 a pound.

Oil prices hovered around eight-month lows, closing down 3.9 per cent at $78.27 US a barrel.