The Toronto Stock Exchange was down Thursday for the first time this week as commodity prices fell and a report indicated an expansion of a criminal probe into U.S. banks' handling of mortgage-related investments.
The S&P/TSX composite index was down 79.38 points, or 0.65%, to 12,116.59, with materials, energy and financials leading the losses.
On the New York Mercantile Exchange, crude oil was down $1.25 to US $74.40 a barrel, while gold fell $13.90 from Wednesday's record close to US $1,229.20 an ounce.
Gold stocks were among the main contributors to the loss on the TSX composite. Barrick Gold Corp. was down 1.7% to $45.76, while Goldcorp Inc. dropped 1.44% to $46.47.
The junior TSX Venture composite was down 16.02 points, or 0.99%, to 1,609.71.
The Canadian dollar slipped from earlier gains to close down seven basis points at US 97.99¢.
Meanwhile, the Wall Street Journal reported that U.S. federal prosecutors and the Securities and Exchange Commission were expanding their investigation into possible criminal behaviour in the selling of mortgage-linked securities beyond Goldman Sachs and Morgan Stanley to include companies such as Citigroup and JPMorgan Chase, among others.
Goldman Sachs Group Inc. is already facing a civil lawsuit launched by the SEC, which alleges the bank sold subprimemortgage investment products, which were set up to fail and benefit a client that was betting against it.
Michael Sprung, president of Sprung & Co. Investment Counsel, said the main worry for investors is that the worse things look in this U.S. banking controversy, the more likely politicians are to over-regulate the industry.
"I think there's a growing fear that the zealousness of the financial reforms might take things a bit far, and that would certainly curb the ability of the capital markets to assist in the recovery," he said.
Sprung also said the issue of government debt in Europe, which brought down markets last week, continues to be a concern despite the US $1-trillion plan of the European Union, European Central Bank and International Monetary Fund to deal with the issue.
On U.S. markets Thursday, the Dow Jones industrial average was down 113.96 points, or 1.05%, to 10,782.95. The Nasdaq composite index was off 30.66 points, or 1.26%, to 2,394.36.
There were, however, gains across most of the larger European and Asian stock markets.
