CANADA STOCKS-TSX hits seven-week low as US tariffs raise recession risk

By Fergal Smith

March 4 (Reuters) - Canada's main stock index fell to a seven-week low on Tuesday, including steep declines for financial shares, as U.S. trade tariffs on Canadian goods went into effect, threatening to push the domestic economy into recession.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 429.57 points, or 1.7%, at 24,572.00, its second straight day of steep losses and its biggest decline since December 18.

It was the lowest closing level for the TSX since January 13.

U.S. President Donald Trump's new 25% tariffs on imports from Mexico and Canada took effect, along with a doubling of duties on Chinese goods to 20%.

Canadian Prime Minister Justin Trudeau described the tariffs as "a very dumb thing to do" and hit back with 25% tariffs on C$30 billion ($20.7 billion) worth of U.S. imports.

"This is going to affect everybody," said Michael Sprung, president at Sprung Investment Management. "I don't think we've seen what I'd call a panic yet but it could easily turn into one."

Canada sends about 75% of its exports to the United States, including oil and cars.

"If the U.S. tariffs remain in place, Canada will undoubtedly fall into recession," said Stephen Brown, deputy chief North America economist at Capital Economics.

Heavily weighted financials fell 2.8%, with iA Financial Corporation Inc <IAG.TO> down 6.1%. Industrials and technology both lost 1.8%.

The materials group also ended lower but the decline was cushioned by gains for gold mining shares. The price of gold XAU= rose, benefiting from a weaker U.S. dollar and safe-haven demand.

Real estate was one of two major sectors to end higher, adding 0.2%, as bond yields fell. Investors raised bets on an interest rate cut next week by the Bank of Canada to support the economy.