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Bears return to Americas
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July 23, 1998: 5:53 p.m. ET
Toronto sheds 1.6 percent, Latins plunge on Wall Street's day of dramatic losses
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NEW YORK (CNNfn) - Fears of rising North American interest rates and a dramatic drop in Wall Street equities shook stock markets throughout the Western Hemisphere Thursday, with most ending sharply lower.
The Toronto Stock Exchange's key 300 Composite Index fell 122.51 points, or 1.67 percent, to 7,227.38.
Canada's largest stock market has been under pressure for four consecutive days, losing 213.95 points, or 2.9 percent, from Monday's opening level of 7,441.33.
New York's benchmark market fared even worse. The Dow Jones industrial average sold off 195.93 points, or 2.15 percent, to close at 8,932.98.
North American investors have been jittery since Tuesday morning -- first in anticipation of bearish testimony by U.S. Federal Reserve Chairman Alan Greenspan and later as the markets digested his comments.
"Investors are worried that a weakening Canadian dollar will force the Bank of Canada to hike short-term interest rates at a time when the country's economic growth is still slow," said analyst Katherine Beattie at Standard & Poor's MMS International. "With the Canadian dollar remaining under pressure ... I can see us going to 7,000."
Canada's currency ended at a record closing low of C$1.4956 (US$0.6686) but finished slightly better than its nadir of C$1.4971 (US$0.6680) reached in the North American trading session.
All of Toronto's 14 subgroups lost ground, topped by conglomerates down 3.26 percent, golds off 2.83 percent and transportation, which fell 2.58 percent.
Brazilian shares ended lower as optimism over the approaching privatization of the Telebras telecommunications system failed to offset concern about Wall Street's slump, brokers said.
"It's too bad for the Brazilian government that the market is in this shape on the eve of the auction. If the Dow continues to fall, we won't be able to hold the market," said a trader at a local brokerage, referring to the July 29 Telebras auction.
The Bovespa index of the 58 most active stocks closed sharply lower, off 273 points, or 2.5 percent, at 10,640. Market turnover was 691.84 million reals ($595.9 million).
Healthy second-quarter earnings by local firms had little effect on Mexican stocks as lackluster earnings north of the border caused local shares to fall in sympathy with Wall Street.
The market's leading IPC index tumbled 80.25 points, or 1.76 percent, to 4,484.50 on weak volume of 59 million.
"We tried to hold out, to resist, but we followed the Dow straight downhill," said Felipe Sanchez, an analyst at Somoza Cortina brokerage.
Share prices held their ground despite a bearish Dow during much of the morning, buoyed by a string of positive earnings reports in the past few days including brewer Grupo Modelo, telephone giant Telefonos de Mexico (TMX) and cement firm Cemex.
"The external environment is killing us right now," Sanchez said.
Added a trader: "We've got a good story in Mexico right now, but who's going to listen?"
Caracas stocks fell 2 percent as Wall Street's weakness was compounded by the government's failure to privatize its aluminum sector, dealers said.
The IBC index plunged 108.41 points to close at 4,938.68.
Financorp broker Alfredo Dosnacimento said the Wall Street factor was the main impetus for the slide. 
-- from staff and wire reports
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