Wall Street tremors turn Toronto bearish

September 18th, 2008 - 11:47 am ICT by IANS  

Lehman BrothersToronto, Sep 18 (IANS) The Toronto Stock Exchange (TSX) turned bearish as the Wall Street jitters caused ripples in North America’s third largest bourse.As major Canadian financial firms disclosed their exposure to the failed Lehman Brothers Wednesday, the S&P/TSX composite index lost 349.30 points, closing the day at 11,877.69 and pushing the bourse into a bear market.

It was the lowest end for the bourse in two years.

The composite index, which crossed the historic 15,000 mark for the first time in the 150-year TSX exactly three months ago, has slipped 21.19 percent since then.

After the extent of exposure of major Canadian insurers to the failed Lehman Brothers and AIG came to light Wednesday, investors dumped their stocks.

Manulife Financial Corp, which revealed investments more than $800 million tied to Lehman Brothers, lost 6.22 percent of its value as stocks slipped $2.24 to $33.76.

Sun Life Financial Inc, which disclosed it has $315 million tied to the failed US giants, lost 8.07 percent, with its stock slipping lower by $3.14 to $35.77.

To calm jitters, Canadian Finance Minister Jim Flaherty said the government was monitoring the situation and taking steps to check volatility in the market.

“Financial markets around the world are undergoing considerable stress. As an open trading economy, Canada is not immune to these recent challenges and is being affected by significant volatility in global capital markets,” he said.

The minister said he was in “close contact with US Treasury Secretary Henry Paulson, other G7 finance ministers, and with the superintendent of financial institutions and the governor of the Bank of Canada, and I will continue to monitor the situation closely”.

He said the Bank of Canada had taken steps to ensure the liquidity of the banking system, adding that the central bank was ready to provide further liquidity to Canadian markets as required.

“Canada continues to weather the global financial market turbulence better than many other countries. I would emphasise that Canada’s banking and insurance industries are well capitalised and our financial system is sound,” the minister said.

Flaherty said the International Monetary Fund (IMF) has declared Canada’s financial system as resilient.

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