10/7/2008 1:01 PM ET
(RTTNews) - Canadian stocks took a turn for the worse in early afternoon dealing Tuesday after bouncing back and forth round the unchanged line for most of the morning.
Toronto's S&P/TSX Composite Index jumped more than 200 points at the opening bell, but has since drifted lower as nervous traders kept on the sidelines, waiting for signs that frozen credit markets can be thawed by a series of measures from central banks and government officials around the world.
The main index is down 101 points at 10,126.21, a modest loss compare to the massive declines seen over the past week and a half. Stocks suffered their worst weekly losses ever last week, and plunged more than a 1000 points in early dealing Monday before halving their losses on the strength of a late-day rally.
After a solid start, miners are once again under heavy pressure, weighed down by speculation that diminished global demand will continue to drive base metal prices lower.
Energy stocks were positive for most of the morning, but turned negative as the price of oil for November slipped back below $90 a barrel. The Energy Index is down 2.1 percent, with slumping Compton Petro (CMT.TO) dropping 10 percent to an all-time low.
In the industrial sector, Bombardier (BBD.B.TO) shares are down 5 percent after saying that sales of its business jets were slowing due to turmoil in the financial markets.
Overshadowed by global efforts to stem the growing credit crisis, the Bank of Canada injected nearly $1.7billion into markets on Tuesday in an effort to boost liquidity.
Overnight, the Reserve Bank of Australia responded to a shrinking national economy and a freeze in global credit liquidity with a 100 basis point interest rate cut. The move raised hoped that other central banks might begin a cycle of coordinated rate cuts later this week.
In a further attempt to stabilize financial markets, the U.S. Federal Reserve said Tuesday that it will step into the commercial paper market in order to provide enough liquidity to help corporations properly manage their working capital.
The Fed announced that it will create a Commercial Paper Funding Facility, providing what it calls a "liquidity backstop" to U.S. issuers of commercial paper. The facility will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers.
by RTT Staff Writer
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