Canadian stocks fell the most since January, erasing gains for the year, as global equities slipped after Greek debt talks fell apart over the weekend.
Royal Bank of Canada and Toronto-Dominion Bank, the nation’s largest lenders, tumbled more than 2.3 percent as financial shares slumped the most in three years. Manulife Financial Corp. lost 3.1 percent as the insurer seeks to raise S$569 million ($421 million) through an initial public offering in Singapore. Pacific Rubiales Energy Corp. and Cenovus Energy Inc. dropped more than 4.4 percent as crude slid.
The Standard & Poor’s/TSX Composite Index fell 317.94 points, or 2.2 percent, to 14,490.15 at 4 p.m. in Toronto, its biggest drop since Jan. 5. A volatility index of S&P/TSX 60 options jumped 16 percent to 14.40, the biggest jump since Jan. 28.
“Seems to me it’s an overreaction, it’s an irrational fear,” David Baskin, president of Baskin Wealth Management, said on the phone from Toronto. His firm manages about C$800 million. “I don’t think Europe is going to crumble into the Atlantic and we’ve had time to get used to this, so we’re seeing some buying opportunities.”
Global markets slumped as investors weighed the chances of a Greek exit from the euro area. The MSCI World Index of developed markets dropped 2 percent, the most in two years. The S&P 500 retreated 2.1 percent in New York, erasing 2015 gains, and the Stoxx Europe 600 plunged 2.7 percent, the most since October.
Greece imposed capital controls, shuttering banks and financial markets until at least July 6, the day after Greeks will vote in a referendum on proposals needed to restore bailout aid. German Chancellor Angela Merkel and French President Francois Hollande signaled they’ve reached the limits of their ability to safeguard Greece, offering no further concessions.
Enbridge Inc. lost 2.1 percent and Canadian Natural Resources Ltd. tumbled 2.7 percent as energy producers sank 2.2 percent as a group. All 10 industries retreated on trading volume 4.4 percent higher than the 30-day average. Crude dropped to the lowest in more than two months.
Financial services stocks plunged 2.5 percent, the most since June 2012. Bank of Nova Scotia sank 3 percent and Manulife slumped 3.1 percent. Brookfield Asset Management Inc. declined 4.2 percent.
The Shanghai Composite Index dropped 3.3 percent, tumbling into a bear market after an interest-rate cut from China’s central bank failed to revive confidence. China’s stock market has plunged from first to worst on global performance rankings as leveraged speculators unwind their positions and a growing number of analysts warn that valuations have climbed too far. China is Canada’s second-largest trading partner after the U.S.
Mapan Energy Ltd. surged 54 percent after agreeing to sell itself to Tourmaline Oil Corp. in a share deal worth about C$106 million.
Element Financial Corp. rose 1.7 percent after agreeing to buy the bulk of General Electric Co.’s vehicle fleet-management business for $6.9 billion.