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Canada's benchmark stock index Monday snapped what was its longest losing streak in more than a decade. But the 242.1-point rally, a gain of 1.85 per cent, still leaves the TSX as one of the world's worst performing developed markets this year.

After a brief 1.7-per-cent rally in October, the S&P/TSX composite index declined for eight days in a row through Friday to 13,075.42, the longest losing streak since June, 2002, and nearing its lowest level in two years.

The TSX as of Friday was down almost 11 per cent this year, posting the third-worst decline ahead of only Singapore and Greece among 24 developed markets. After Monday's rally, which was ignited in part by a rally in crude prices amid concerns the deadly attacks in Paris could threaten global oil supply by raising geopolitical tensions, the index was down 9 per cent.

"There will be more pain for Canada," said Sadiq Adatia, chief investment officer at Sun Life Global Investments in Toronto. His firm manages about $11.5-billion and has been underweight Canadian investments for three years in favour of U.S. and international markets. The S&P/TSX will likely fall below 13,000 points in the near term, levels not seen in two years, he said.

"There will be more downside here," he said. "We're just starting. There's nothing on the horizon that will paint a brighter picture for Canada."

Commodities have been the major catalyst for the decline, with prices from oil to copper sliding amid slowing growth in China and supply gluts. Expectations the U.S. Federal Reserve will raise interest rates as early as December is strengthening the U.S. dollar, which commodities are typically priced in, making them more expensive to buy.

"There is so much apathy and negativity against Canada," said Greg Taylor, a fund manager at Aurion Capital Management in Toronto. His firm manages about $7.2-billion. "Nobody wants to put a pin in this, take a stand and fight back. You have uncertainty about the Fed, the U.S. dollar strengthening, commodities getting crushed. Canada, psychologically, has been hurt."

Drug makers, a rare source of positive returns for Canadian investors through the first half of the year, have become the worst-performing stocks in the S&P/TSX in a matter of months. Valeant Pharmaceuticals International Inc., briefly the largest company in Canada by market capitalization, has plunged more than 70 per cent from an August record and faces continued scrutiny and probes from U.S. lawmakers over its pricing practices.

"Our one non-commodity trade just blew up as fast as anything I've ever seen," Mr. Taylor said. "Right now we're in a period of max uncertainty. No one knows what oil will do or what the Fed will do, so people are just staying on the sidelines in Canada."

Even the country's vaunted banks, ranked the world's soundest by the World Economic Forum for the eighth year in a row, have been crumbling, with Royal Bank of Canada and Bank of Nova Scotia posting declines of more than 7 per cent this year over concerns of a slowdown in consumer lending. Bombardier Inc., once one of the country's biggest industrials, has asked for government aid for its struggling C Series jet program, with its shares down almost 70 per cent this year.

With the slide in equity prices, valuations for S&P/TSX stocks have fallen about 9 per cent from an April peak to about 21 times earnings. Nevertheless, it's difficult for investors to properly value Canadian stocks, especially natural-resource producers, given the uncertainty surrounding the price of commodities, said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier in Toronto. His firm manages about C$5 billion.

Some investors see grounds for optimism in Canada's prospects longer term.

"We're more positive on Canadian companies with U.S. exposure," said Tim Hylton, a Toronto-based equity strategist at Fiera Capital Corp. His firm manages about $8.8-billion and holds positions in companies including packager CCL Industries Inc. and auto-parts manufacturer Magna International Inc., which are positioned to take advantage of an improving U.S. economy. "We would forecast a 6- to 8-per-cent increase over the next 12 months for Canadian equities."

Mr. Hylton's firm owns positions in West Fraser Timber Co. Ltd., as the outlook for U.S. housing is improving, he said. In the past couple of months, Fiera has also "made a first, subtle shift" from integrated energy names such as Suncor Energy Inc. to producers such as Canadian Natural Resources Ltd.

"We're dipping our toes in the water, we're doing this with an eye to the future," Hylton said. "Oil prices will come up as the supply-and-demand balance improves."

For Aurion's Mr. Taylor, there's no reward for those getting off the sidelines early. While a case can be made for a rebound in Canada, it would require a series of dominoes to fall perfectly, including sudden economic turnarounds in Europe and China and a sharp jump in oil.

"If you want to be bullish on Canada it would take a lot of assumptions," he said. "You can't fight this. There's no points for being early. We're in this perfect storm, we're closer to pricing in the worst-case scenario."

Bloomberg News, with files from The Globe and Mail