War-wary markets retreat - Loonie up 0.01 of a cent at 68.25 cents (U.S.)

www.thestar.com Mar. 10, 2003. 04:53 PM MALCOLM MORRISON CANADIAN PRESS

Stocks tumbled Monday as anxiety about an invasion of Iraq and its consequences dominated the markets, driving New York blue chips to a triple-digit loss.

Losses accelerated late in the session when French President Jacques Chirac said his country was prepared to join Russia in voting down a resolution sponsored by the United States and Britain that would set a March 17 ultimatum for Saddam Hussein to disarm or face war.

The Dow Jones industrial average plunged 171.85 points at 7,568.18.

News that housing starts in Canada last month were up 34.5 per cent over the January level, blowing past expectations to a level not seen since August 1987, did nothing for the Toronto market.

Declines were widespread, led by the information technology and financial stocks, taking the S&P/TSX index 82.19 points lower to 6,277.67 at the close, after a loss of 3 per cent last week.

Nortel Networks lost 16 cents to $3.04 and Royal Bank surrendered $1.62 to $55.98.

The gold sector joined the retreat, although the bullion price rose $3.90 to $354.70 (U.S.) an ounce.

The Canadian dollar was up 0.01 of a cent at 68.25 cents (U.S.), still near 32 1/2-month highs thanks to the housing sector report and weakness in the American dollar as traders feared war would hit the U.S. economy.

The TSX Venture Exchange lost 5.91 points at 1,080.64.

The Nasdaq marked the third anniversary of its peak of 5,131.52 by losing more ground, losing 26.92 points to 1,278.37. The S&P 500 was off 21.41 at 807.48.

"It's painful, isn't it?" said Patricia Croft, managing partner at Sceptre Investments.

"It's just pretty ugly out there and not a lot of reason for people to want to step up and put all their money down."

News of another missile firing by North Korea also depressed markets, as did Deutsche Telekom's report of the deepest corporate loss in European history.

Europe's largest telecommunications company lost 24.6 billion euros ($27.1 billion U.S.) in 2002. In New York, its shares lost $1.02 to $10.11 (U.S.).

Markets were also spooked after regional Federal Reserve President William Poole told regulators with oversight of mortgage financiers Fannie Mae and Freddie Mac that the two may lack adequate capital to weather a disruption in financial markets. The two together control 42 per cent of all U.S. home mortgages. Fannie Mae shares dropped $4.35 to $58.93 (U.S.).

On the Toronto market, declines beat advances 689 to 369, with 219 unchanged.

Active stocks in Toronto included Bombardier, continuing last week's descent after a profit warning and plans for 3,000 job cuts. Its shares lost 15 cents to $3.60.

EnCana advanced 42 cents to $48.67, although crude oil slipped 51 cents to $37.27 (U.S.) a barrel in New York.,

Talisman Energy rose 71 cents to $60.46 after completing its exodus from the Greater Nile oil project in Sudan. The sale to Indian state-owned company ONGC Videsh, announced in October, had been delayed past the original closing date of the end of 2002.

Stuart Energy Systems fell 42 cents to $3.93 after the company announced it is cutting 70 jobs and closing two offices in Quebec as it consolidates last month's acquisition of a Belgium-based hydrogen energy services company.

Domtar slid 23 cents to $15.32, TD Bank was down 79 cents to $31.71 and BCE fell 40 cents to $26.60.

Business software maker Cognos announced an alliance with the Giuliani Group, a consulting firm headed by former New York mayor Rudolph Giuliani. Its shares tumbled $1.62 to $32.65.

Lorus Therapeutics rose five 9 cents to 75 cents after the biotech company received an additional U.S. patent on its cancer treatments.

Global drugmaker Bristol-Myers Squibb restated $1.5 billion (U.S.) in earnings and $2 billion in sales for 1999 through 2001, to reflect disastrous incentives to wholesalers that distorted sales and created an inventory glut. Bristol-Myers shares - trading at less than half their 52-week high - lost 29 cents to $22.51 (U.S.).

Toronto volume was 136.7 million shares worth $1.65 billion.

The Nasdaq Canada index fell 3.57 points at 215.33.