Toronto stocks closed sharply lower Monday sideswiped by slumping tech stocks. The S&P/TSX composite index dropped 73.11 points to close at 6,504.09.

Tech stocks were hampered by a downgrade of IBM by a key U.S. brokerage. The TSX information technology sector plunged 7.6%.

The heavily-weighted financials sector finished down 0.16%, after pushing into positive territory earlier in the session.

The sector was buoyed by Manulife Financial’s $6.4 billion takeover bid for Canada Life. Canada Life shares surged $9.05 on the strength of that bid, closing at $40.50. Manulife shares fell $2.50 to 36.40.

Nortel led the volume board and was one of the TSX’s biggest percentage losers. It dropped almost 20%, down 57¢ to $2.38.

Other big tech losers included Celestica, off $1.70 to $23; Research in Motion, down $1.10 to $21.90; and ATI Technologies, which fell 80¢ to $10.40.

Zi Corp bucked the downtrend in techs by rising 22%, up $1.12 to $6.22. The firm said it had settled its lawsuit with Tegic Communications for an undisclosed amount.

Ballard Power shares jumped 73¢ to $22.27 after it said it would cut 400 jobs and disclosed that Ford and DaimlerChrysler would provide another US$97 million in funding.

WestJet shares fell $2.94 to $17.94 after the discount carrier warned that profits would be squeezed by fare wars and seat sales. Air Canada shares fell 24¢ to $4.90, following an announcement today that Star Alliance partner United Airlines is filing for bankruptcy.

Business forms maker Moore Corp fell $1.79 to $14.01, off its worst levels of the day that saw its stock plunge as low as $12.05. Moore’s CEO, who’s credited with turning around the money-losing company, announced he’d be leaving at the end of the year.

Volume on Monday was 232.4 million shares, valued at C$2.82 billion. Momentum was negative as decliners outpaced advancers 663 to 461, while 207 issues remained unchanged.

The junior TSX Venture Exchange was down 2.72 points at 974.04.

In New York, the Dow Jones industrial average fell 172.36 points to 8473.41. IBM dropped US$2.73 to US$79.59 after Bank of America downgraded the stock.

The Nasdaq Composite Index dropped 55.30 points to end the day at 1367.14. The S&P 500 index was 20.23 points lower at 892.

The Canadian dollar rose US0.13¢ to close at US64¢.