Canadian stocks and loonie fall over slumping oil prices

Canada's dollar and major stock market were pounded in trading Tuesday as investors turned gloomy about short-term prospects for oil prices.

The loonie dropped 1.3 cents US to 96.02 cents US in trading, its lowest level in almost a year.

As well, the TSX Composite Index closed the day down 254.83 points, or 1.88 per cent, closing Tuesday at 13,242.20.

Global investors were dumping the loonie and Canadian stocks because of the perception that Canada's economy will be hurt if crude oil prices keep slipping worldwide

Oil is trading below $118 US a barrel, almost 20 per cent off of its all-time high of $147 US, reached less than four weeks earlier.

Gas watchers argued that consumers appear set to cut their driving and spend less overall because of rising energy prices. As a result, future demand for crude oil might drop.

While higher energy prices hit Canadians in a similar way to consumers elsewhere, Canadian industry benefits from soaring crude because this country is a major oil producer.
http://www.cbc.ca/money/story/2008/08/05/loonie.html