TORONTO -- The Toronto stock market sold off Wednesday, losing 1.5 per cent amid growing worries about Spain's banking sector and the future of tech giant Research in Motion Ltd. (TSX:RIM).
The S&P/TSX composite index retreated 176.08 points to 11,433.22 led by a steep slide in energy stocks as crude oil fell below US$88 a barrel to its lowest level since October. The July crude contract on the New York Mercantile Exchange fell $2.94 to US$87.82 a barrel.
The TSX Venture Exchange was down 19.91 points to 1,289.43.
The BlackBerry maker's shares shed 82 cents or 7.14 per cent to $10.66, after going as low as $10.30. RIM announced after the close Tuesday that it expects to report an operating loss in the first quarter and plans on significant layoffs and other cost-cutting initiatives this year.
RIM also said it has hired J.P. Morgan Securities LLC and RBC Capital Markets to advise on its troubled business and financial performance as the company continues to give up market share to competitors such as Apple and devices using's Google's Android operating system.
"They're exploring all options available to them,'' said Chris Kuflik, investment adviser at ScotiaMcLeod in Montreal, adding it is far too early to write off RIM.
"They still increased their number of subscribers, there are still a number of dedicated users, they definitely stumbled along the way and didn't properly assess their competition (but) the company has $2 billion in cash.''
The Canadian dollar was down 0.6 of a cent to 97.16 cents US as worries about the eurozone pressured the euro and resource-based currencies such as the loonie while traders sought the safety of U.S. Treasuries.
New York markets were also well into the red with the Dow Jones industrial average down 160.83 points at 12,419.86.
The Nasdaq composite index fell 33.63 points to 2,837.36 while the S&P 500 index lost 19.1 points to 1,313.32.
The latest round of worry about the eurozone has shifted to the Spanish banking sector in recent days, especially after Bankia, the country's fourth-largest lender, last week announced it needed C19 billion in state aid.
The concern is that Bankia's woes might spread across Spain's banking sector, which has suffered badly from the collapse of the construction sector.
Nervous investors sent Spain's borrowing costs higher with the 10-year government bond, a key indicator of market confidence in a country's ability to pay down its debt, getting closer to the seven per cent level which is viewed as unsustainable. On Wednesday, the interest rate or yield on Spanish 10-year bonds shot up 25 basis points to 6.67 per cent, matching the level it hit at the height of the eurozone crisis late last year. The yield later fell back to 6.66 per cent in afternoon trading.
Earlier Wednesday, Madrid denied newspaper reports that the European Central Bank had rejected a Spanish idea to finance a bank bailout and it defended the country as sound.
The Financial Times reported that the ECB had rejected the idea of Spain paying for the C19-billion bailout of Bankia by using government bonds, which would then be used as collateral for cash from the ECB.
"They have to do something to put a ring around their banks,'' added Kuflik.
"The extend and pretend cannot continue. There has to be some form of a resolution and the difficulty is, you have so many different agendas from so many different nations.''
Prices for oil and metals fell back on a higher U.S. dollar and on expectations that Europe's sputtering economy will be a drag on global crude demand. A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.
The July crude contract on the New York Mercantile Exchange lost $2.94 to US$87.82 a barrel, taking the energy sector down 3.94 per cent. Suncor Energy (TSX:SU) fell $1.04 to $28.15.
Crude has plunged more than 17 per cent from four weeks ago as investors also considered the growing possibility that political turmoil in Greece could trigger a chaotic exit of that country from the euro common currency.
Copper prices have also hit multi-month lows and the July contract on the Nymex dropped seven cents to US$3.39 a pound. The base metals group dropped 3.13 per cent and Teck Resources (TSX:TCK.B) gave back $1.22 to C$31.29 and First Quantum Minerals (TSX:FM) shed 63 cents to $17.67.
Worries about Spain helped push the financial sector down a bit over one per cent and TD Bank (TSX:TD) gave back 91 cents to $77.99 while Bank of Montreal (TSX:BMO) declined 71 cents to $54.07.
The industrials sector lost 1.8 per cent with Bombardier Inc. (TSX:BBD.B) down nine cents at $3.86.
Canadian Pacific Railway (TSX:CP) shares were down $1.72 to $75.08 as the House of Commons passed legislation to end a week-long
strike by 4,800 workers. It will now go to the Conservative-dominated Senate for Royal Assent. But that won't happen until Thursday at the earliest.
The gold sector the only sector to finish positive, up about 0.75 per cent as bullion prices gained $14.70 to US$1,564.60 an ounce. Goldcorp Inc. (TSX:G) added 74 cents to $37.89 and Barrick Gold Corp. (TSX:ABX) climbed 50 cents to $40.24.