By James Langton

(February 16 – 12:45 ET) – There’s no joy in Stocksville, today. Traders took Nortel Networks behind the shed for a beating this morning. Last night’s earnings warning has had a predictable effect on the Toronto Stock Exchange. At midday the TSE is down 604 points to 8363.

Almost as predictable as Nortel’s thumping is the TSE’s inability to handle the volume of trading. It halted the bloodbath at 10:02 after it experienced system problems. Trading was briefly reopened at 11:10, then halted again. It finally resumed trading at 11:28. As usual, traders were able to get the dirty deed done in New York while the TSE fussed.

Despite the Nortel halts, the TSE managed to trade 83.6 million shares this morning – about average volume. It was about 4:3 in favour of sellers. Market breadth is much more negative, with losers outnumbering winners 23:10. With Nortel down 33%, the industrial products group has taken a 21% shearing. There’s also strong selling in utilities, conglomerates, and miners. Golds and energy are up, financials have a little gain, too.

The Nortel weakness is not only banging the index with its own weight. It is having a strong knock-on effect on related firms. C-MAC is down 32% in heavy trading. Sstocks such as Celestica, JDS Uniphase, Exfo Electro, BCE Emergis and Research in Motion are being hammered, too.

Against this tide of selling, Abitibi is up, as are names such as Bombardier, CN, Magna and Canadian Tire. Energy stocks are gaining too with Gulf Canada, Northstar Energy, Precision Drilling, and Westcoast Energy all up. Berkley is a top trader too, on the hopes that Hunt Oil is going to increase its hostile offer for the firm to trump white knight Anadarko.

Yesterday’s earnings warning, Sun Life, suddenly didn’t seem so bad to traders today. It is recovering in active trading today. Manulife is joining it on the upside, while Canada Life and Clarica are down. The banks are also mixed with TD down and BMO, Scotiabank and CIBC up.

The CDNX is down 47 points to 3173. Volume is a little low at 16.2 million shares. Techs are down 2.4%, miners off 1.3% and oils down a little too. Genoil Inc. continues as the top trader, down 7% to 14¢ on 1 million shares.

In New York, Nortel is slamming the trading, too, but weak comments from HP and Dell aren’t helping. This morning’s producer inflation report has some traders worried that inflation is still on the rise, and further rate cuts will be put off as a result.

The Dow Jones industrial index is down 82 points to 10809. The Nasdaq composite index is taking a thumping It’s off 114 points to 2438. The S&P is down 22 points to 1305.