TSX falls as Dubai debt concerns rattle banks

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(Reuters)

By Ka Yan Ng

TORONTO (Reuters) - Toronto's main stock index slumped 200 points on Thursday as debt concerns in Dubai ripped through financial markets, heightening anxiety about the stability of the world economic recovery.

Financial stocks were among the hardest hit as investors wondered if banks had any exposure to bad debt in the Gulf. The news also triggered widespread concern about the financial health of the once-booming Mideast region.

Royal Bank of Canada was the biggest drag on the index, down 2.3 percent at C$55.88, while Toronto-Dominion Bank was off 1.99 percent at C$65.84. Bank of Nova Scotia lost 2.3 percent to 47.91.

"Given the fantastic run that Canadian banks have had, investors would be content to take profits first and ask questions later," said Elvis Picardo, an analyst and strategist at Global Securities in Vancouver.

Manulife Financial was the only financial services company to confirm it has no exposure to flagship holding company Dubai World and its affiliates, which had spearheaded the emirate's breakneck growth. Manulife fell 0.5 percent to C$18.50.

The S&P/TSX composite index fell 200.10 points, or 1.72 percent, to 11,436.80. Nine of the TSX's 10 main groups dropped.

Resource stocks were also knocked lower as the price of gold retreated, while oil fell toward $76 a barrel. Top oil company Suncor Energy fell 2.4 percent to C$38.01, while miner Goldcorp dropped 3.1 percent to C$45.10.

(Editing by Rob Wilson)