Canada's main stock index took it on the chin for the second day in a row in morning trading Tuesday as falling oil prices and financial sector jitters had investors shedding stocks in Toronto.
By mid-morning, the TSX had dropped to 11,974, down 279 points, or 2.2 per cent.
One of the culprits in Toronto was residual nervousness after Monday's financial debacle in which the main stock markets in New York and Toronto lost more than four per cent of their value in the wake of the bankruptcy of Lehman Brothers.
Lehman's failure and the fire sale purchase of Merrill Lynch & Co. by Bank of America on Monday led stock investors to dump most types of equity issues in an effort to exit a growing financial services meltdown.
In Canada, falling oil prices, which punched through the $100 US a barrel level this week for the first time since March 4, also hurt the Toronto market.
Prices for light, sweet crude slipped a further $2.57 Tuesday declining to $93.14 on the New York Mercantile Exchange.
International investors have been shedding Canadian stocks throughout the summer, partially in response to shrinking oil values. Since September, the TSX has lost 12 per cent of its total value.
Perhaps surprisingly after Monday's drastic sell-off, New York equities fared better in Tuesday's trading.
The Dow Jones industrial index fell 125 points, or 1.2 per cent, as markets opened. But, buyers quickly outnumbered sellers, leading to a recovery in stock prices.
By mid-morning, the Dow index was off only 38.43 points, reaching 10,879.08.
Still, some U.S. companies were getting pummelled.
Shares in American International Group (AIG) were down 38 per cent at $2.95.
AIG saw its credit rating chopped by Standard & Poor's, Moody's and Fitch rating agencies this week. The huge insurer is seeking somewhere in the range of $70 billion US in new financing to refinance its debt-laden balance sheet.
AIG, Lehman Brothers and Merrill Lynch all suffered from high debt loads driven by crumbling investments in asset-backed commercial paper.Shares in another investment house, Goldman Sachs, were down. Instead of solvency concerns, however, investors sold Goldman stock because the company reported a third-quarter profit of $845 million, down 70 per cent compared with the same quarter last year.
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