TORONTO, Nov 10 (Reuters) - Confidence among Canadian companies plunged anew in the third quarter as financial and stock markets hit heavy turbulence, signaling a period of weak capital investment, the Conference Board of Canada said on Monday.
The board's index of business confidence fell 13.5 points in the third quarter to 78 points. It was the fifth straight time the quarterly reading dropped.
Only twice in the past -- in the third quarter of 2001 and during the 1990-91 period -- has the index dropped below that level, the survey said.
In both cases, the drops were followed by contracting business capital investment.
"The effect the financial and stock market turbulence is having on business confidence is likely to further defer investment intentions," the board said in a statement.
Only 25.8 percent of business leaders believe it is a good time to invest in their plant or purchase new equipment.
Respondents were asked what factors were adversely affecting the level of their investments and the most common response given was "weak market demand," cited by 43.4 percent of respondents.
More than a quarter of the respondents -- 27.7 percent -- reported difficulty in obtaining corporate financing as a negative factor influencing their investment decisions.
Other factors cited include weaker commodity prices and the depreciation of the Canadian dollar.
The latest survey, conducted over the first three weeks of October, found that business leaders were much more concerned about the economy and their future financial situations than they had been in a survey conducted during the summer.
In October, the S&P/TSX composite index sank 16.9 percent as the fallout from the credit crisis and fears of a world recession took hold, a period described as extreme volatility by market watchers.
Expectations about the future financial health of companies was mixed, the survey said.
Only 22 percent said they expect their firm's financial position to improve over the next six months, while 26.8 percent believe it will worsen. More than half said they expect their finances to remain unchanged.
A majority of business leaders, 70 percent, believe that the economy would be in worse shape in six months.

(Reporting by Jennifer Kwan; Editing by Frank McGurty) Keywords: CONFERENCEBOARD/SURVEY (jennifer.kwan@thomsonreuters.com; +1 416 941 8178; Reuters Messaging: jennifer.kwan.reuters.net@reuters.com)

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