(Adds strategist comment, updates prices to close)
* TSX ends down 377.22 points, or 2.72 percent, at 13,481.90
* All 10 of index's main groups close lower
* Energy stocks fall 4.6 pct, financials lose 2.8 pct
By Alastair Sharp
TORONTO, Sept 1 (Reuters) - Canada's main stock index fell
2.7 percent on Tuesday, in a broad retreat led by financial and
energy stocks as oil prices slumped, weak Chinese data renewed
fears of slowing growth, and Canada officially slipped into
recession.
Canada's energy sector, a major force on the index, dropped
4.6 percent as crude tumbled after a three-day rally.
The financial sector, which accounts for more than 35
percent of the index's weight, fell 2.8 percent.
Overall, the Toronto Stock Exchange's S&P/TSX composite
index .GSPTSE declined 377.22 points, to close at 13,481.90.
Chinese manufacturing activity shrank in August, while the
country's services sector also showed signs of cooling,
reinforcing investor fears that the world's second-largest
economy may be heading for a hard landing.
"Initially the narrative was that maybe we'd see a 7 percent
growth rate in China, but it looks like it's going to be much
lower than that," said Elvis Picardo, strategist and vice
president of research at Global Securities in Vancouver.
"Some of this fear and panic has to wash out, and that may
take another month or two," he said.
The most influential decliners on the index included Royal
Bank of Canada RY.TO , which sank 2.7 percent to C$71.33, and
Bank of Nova Scotia BNS.TO , which gave up 3.3 percent to
C$58.24.
All 10 of the index's main sectors were lower, with 230
issues declining and only 17 advancing, for a 13.5-to-1 ratio on
the downside.
Canadian Natural Resources CNQ.TO lost 4.4 percent to
C$28.36, Encana Corp ECA.TO stumbled 8.3 percent to C$9.01,
and Suncor Energy Inc SU.TO dropped 3.2 percent to C$36.05.
Consumer staples was the only group whose losses were under
1 percent.
"A correction is never easy," said Michael Sprung, president
at Sprung & Co. Investment Counsel. "What we're seeing is just
volatility created by reverberations of people digesting all of
this information."
Sprung said he expects the volatility to continue as China
jitters and speculation over when and if the Federal Reserve
will raise interest rates remain, noting that September and
October also tend to be seasonally weak months.
"Within this environment, it's opening a lot of
opportunities for investors," said Sprung, adding that investors
should be making bids on well-managed companies with good
balance sheets.
Canada's economy shrank in the second quarter, putting the
country in recession for the first time since the financial
crisis, although growth did pick up in June, suggesting the
slowdown may be short-lived.