Toronto stock market tumbles

TORONTO (AP) — Concerns over the U.S. economy and Europe's debt problems sent the Toronto stock market tumbling Thursday over 400 points.

The S&P/TSX composite index plunged 448.52 points to 12,367.51 at closing Thursday, while the TSX Venture Exchange fell 101.18 points to 1,864.49.

The Canadian dollar also got caught up in the downdraft as tumbling prices for oil and metals helped push the currency down 1.7 U.S. cents to 102.19 U.S. cents.

Just a couple of weeks ago, investors were concerned the U.S. economy had hit a soft patch. Since then a raft of economic data has raised worries about the economy slipping back into recession.

Manufacturing, consumer spending and hiring by private companies are below levels that are consistent with a healthy economy.

"It has now become completely about the economy," said Sid Mokhtari, market technician at CIBC World Markets. "The evidence suggests there is now the risk of a serious economic slowdown."

Investors will be looking toward economic data released Friday for more perspective on the direction of the U.S. economy.

Expectations are modest for tomorrow's U.S. non-farm payrolls report for July, with economists expecting something in the neighborhood of 75,000 jobs. Pessimism deepened after jobless insurance claims last week were down by only 1,000.

"If numbers are in line or below what the consensus is, I think we will see the selling pressure continue," added Mokhtari.

Canadian jobless figures for July will also be released on Friday and economists expect about 20,000 jobs were created.

Buying sentiment has also been hit recently by concerns that Italy or Spain may need help from the European Union. The benchmark stock indexes in Italy, Germany and England each fell by three percent Thursday.

Markets have also been driven lower by the weeks of bitter partisan wrangling that preceded an agreement by American lawmakers to raise the U.S. debt limit and avoid a default.

The flight to safety has resulted in large investors moving so much money into cash accounts at Bank of New York that on Thursday the bank said it would begin charging some clients a 0.13 percent fee to hold their cash.

The sour sentiment has taken a substantial toll on the TSX, which is heavily weighted with commodities. The TSX has lost ground in five of the last seven sessions, sending it down more than 7 percent or about 1,000 points below where it started 2011 trading.