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Debt worries weigh on stock markets
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The Canadian Press-
North American stock markets fell two per cent Monday after the German government suggested that an imminent solution to the European debt crisis was not at hand.
A spokesman for German Chancellor Angela Merkel said an EU summit meeting this weekend will be just a "step" on a long road.
That sent the New York and Toronto markets into an early slump that extended into the close of trading.
The S&P/TSX composite index fell 158 points, or 1.3 per cent, to 11,923.
The Dow Jones industrial average dropped 246 points, or 2.1 per cent, to close at 11,398.
The steep declines undid much of last week's healthy market gains that were due in large part to indications from France and Germany that some sort of solution to the debt crisis might be in place by the end of the month.
"I think everyone last week decided that the European crisis was over, that it was all going to get solved by the end of the month," said Kate Warne, who covers Canadian markets for Edward Jones in St. Louis.
"Nobody should be hugely surprised because the process in Europe seems to be to promise a lot and deliver a little and we've seen that for the last year and a half."
The loonie lost 1.12 cents to 97.84 cents US.
Much of the weakness in Toronto could be traced to weakness in resource stocks.
Commodity prices fell across the board. Crude oil futures lost 42 cents to $86.38 US a barrel.
Gold futures fell $6.30 US an ounce to $1,675.50 an ounce. Silver and copper also fell.
The TSX metals and minerals sub-group plunged 5.0 per cent. The energy index shed 2.0 per cent.
The IT index dropped 3.7 per cent, mainly because of another big drop in the share price of Research in Motion.
Stock in the troubled BlackBerry maker fell $1.36 to $22.90. Investors did not seem to be impressed by the company's offer of $100 worth of apps to make up for last week's global service outage.
Investor Carl Icahn also told a U.S. business channel that he was not interested in taking a stake in RIM, contrary to rumours that swept through the market last month.
Shares in Sun Life were also big losers. Canada's third-biggest insurance company warned it would post a $621-million loss in the third quarter because of declines in stock markets and interest rates. Sun Life shares fell $2.38 to $24.07, leading the TSX financials index to a 1.2 per cent drop.
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