Slow growth fears Spark Selloff

The Toronto stock market sold off Wednesday as worries about the pace of global growth raised concerns about demand for commodities and sent prices for energy and metals lower.

The S& P/ TSX composite index lost 172.63 points or 1.42% to 11,947.29, the market’s first close below the 11,000- mark since November 15.

“This clearly reflects a move to pricing in slower growth. The risk of deflation is back on the table ( and) the effectiveness of central bank intervention is being questioned more,” said Wes Mills, chief investment officer for Scotia Asset Management.

The Canadian dollar lost US0.58¢ to US97.41¢ as the Bank of Canada announced it was leaving its key rate unchanged amid continued economic weakness. The central bank also cut its 2013 economic growth forecast to 1.5% from an earlier estimate of 2%.

An earnings disappointment from Bank of America and sliding resource stocks also punished New York markets.

The Dow Jones industrials fell 138.19 points to 14,618.59, the Nasdaq composite index dropped 59.96 points to 3,204.67 and the S& P 500 index lost 22.56 points to 1,552.01.

U. S. indexes moved off the worst levels of the session mid- afternoon after the U. S. Federal Reserve’s latest economic snapshot for late February and March showed economic activity expanded at a moderate pace. The central bank added that real estate construction is improving markedly in most districts.

The dismal showing on markets followed a sharp selloff Monday.

And it led analysts to think American markets are in the midst of a retracement some thought inevitable after the sharp gains of the year so far sent the Dow and S& P 500 indexes up well over 10% year to date.

Oil and copper prices retreated a day after the International Monetary Fund lowered it global economic growth projections. The IMF cut its forecast for global growth to 3.3% this year from its forecast in January of 3.5%.

The base metals component led decliners, down 7.34% as copper, viewed as an economic bellwether, slid 12¢ to US$ 3.19 a pound.

Both oil and copper sustained steep declines on Monday after data showed that the Chinese economy grew at a 7.7% rate in the most recent quarter, crushing hopes for growth of around 8%.

Further prospects for a sluggish recovery sent the May crude contract on the New York Mercantile Exchange down $ 2.04 to US$ 86.68 a barrel and the energy sector slid 2.57%.