By John Tilak
TORONTO (Reuters) - Canada's main stock index dropped on Monday to its lowest in almost three weeks, hit by a selloff in emerging market equities that was triggered by concerns about Chinese economic growth and the U.S. Federal Reserve's stimulus program.
Data out of China has shown signs of weakness in the world's second-biggest economy and weighed on global equities.
Investors also eyed the U.S. Federal Reserve ahead of a policy meeting this week to decide whether the central bank will further scale back its stimulus measures.
A recent slump in the Turkish lira and declines in other emerging market currencies and equities that began last week spread to Canadian stocks as well, causing investors to avoid riskier assets.
The Toronto market traded in the red for a third straight day, following its biggest single-day drop in seven months in the previous session, and turned negative for the year.
"Investors are suddenly fixated on the risk aspect, and anything now seems like a looming crisis," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
"If the emerging markets situation worsens, it does throw a spanner into the works, but it's too early to tell," he added. "Overall the feeling seems to be that this is a mere blip, and not a very big correction."
The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed down 135.47 points, or 0.99 percent, at 13,582.29, after touching 13,520.51, its lowest since January 7.
Nine of the 10 main sectors on the index were in negative territory.
Financials, the index's most heavily weighted sector, dropped 1.6 percent. Bank of Nova Scotia slipped 2.2 percent to C$61.69 and had the biggest negative influence on the market. Royal Bank of Canada gave back 1.6 percent to
BMO Financial Group declined 2.1 percent to C$70.46 after the lender made a preliminary offer to buy British fund manager F&C Asset Management for 697 million pounds ($1.2 billion) in cash.
Shares of gold miners reflected declines in the price of bullion. Barrick Gold Corp fell 2.6 percent to C$20.61, and Goldcorp Inc shed 2.5 percent to C$25.93.
Weaker oil prices weighed on sentiment for shares of energy producers, which fell 1.4 percent. Suncor Energy Inc was down 1.6 percent, at C$36.32.
In other corporate news, Hudson's Bay Co said that it would sell its flagship downtown Toronto store and neighboring executive offices for C$650 million ($587.09 million) to Cadillac Fairview Corp and open a full-line Saks store in the leased-back space. HBC shares gained 1.2 percent to C$16.89.
(Editing by Meredith Mazzilli)