TORONTO (Bloomberg) - Canada's main stock index had its worst weekly drop in seven years, after US President George Bush's stimulus plan failed to relieve investor concern that the world's biggest economy will slip into recession.

Royal Bank of Canada led banks and insurers lower, after Ambac Financial Group Inc. became the first bond insurer to lose its AAA rating, fuelling speculation that debt it insures, including some held by Canadian banks, may also be downgraded.

The Bush administration proposed a growth package of as much as $150 billion. Bush said a package of at least 1 percent of GDP is needed "as soon as possible" to keep the economy growing.

"The concern is that it's not big and quick enough," said Todd Johnson, who helps manage about $50 million as a portfolio manager at BCV Asset Management Inc. in Winnipeg, Manitoba. "People just want some good news. If the economy goes into recession, everything goes down."

The Standard & Poor's/TSX Composite Index fell 58.50, or 0.5 percent, to 12,737.13 in Toronto. The benchmark lost 6.6 percent in five days for its worst week since October 27, 2000. It has wiped out last year's 7.2 percent gain, falling 7.9 percent in 2008.

Banks including Royal Bank for Canada have taken or announced writedowns of about $4.7 billion in the third and fourth quarters of fiscal 2007. Canadian Imperial Bank of Commerce this week confirmed that it expects pretax writedowns of about $2.46 billion, of which $2 billion is for securities backed by bond insurer ACA Capital Holdings Inc., downgraded last month.

Royal Bank, Canada's biggest lender, fell 40 cents to C$47.71 in Toronto Stock Exchange trading. Bank of Nova Scotia, the nation's third-biggest, declined 65 cents to C$45.87. Toronto- Dominion Bank slid 56 cents to C$64.69.

Sun Life Financial Inc., Canada's third-biggest insurer, slid 87 cents to C$47.95. Manulife Financial Corp., the largest, fell 28 cents to C$36.54.

An index of financial shares dropped one percent today and 5.4 percent for the week. Energy and raw-materials producers fell even as crude oil, copper and gold prices advanced on concern the U.S. slowdown will curb demand for Canadian commodities. The three groups account for about three-quarters of the S&P/TSX's value.

Teck Cominco Ltd., Canada's biggest zinc and copper miner, slipped 90 cents to C$30.42 for a weekly drop of 11 percent.

Kinross Gold Corp. declined 49 cents to C$20.95.

A measure of raw-materials shares has declined 9.5 percent since January 11 for its steepest weekly decline since July 2002. Last year it was the second-best performer with a 29 percent gain behind technology stocks.

Canadian Oil Sands Trust, the world's largest oil-sands miner, slid 86 cents to C$34.87. Talisman Energy Inc., which produces oil and gas in the North Sea, fell 29 cents to76.

Trican Well Service Ltd. plunged C$2.21, or 13 percent, to C$14.50, the most since March 11, 1999. Earnings in the fourth quarter fell short of the oil and gas driller's expectations, Trican said in a statement on Market News.

A gauge of energy stocks fell 7.7 percent in five days.