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TORONTO (Reuters) - Canada's main stock index hit a one-week low on Friday with falling oil prices fueling a decline in shares of energy producers and a Federal Reserve meeting next week reviving worries about the fate of the U.S. central bank's stimulus program.
The Toronto market fell for a fourth consecutive session and declined on the week after four straight weeks of gains.
The price of oil slipped as more concerns over waning Chinese demand emerged after the world's second-largest oil consumer ordered companies across 19 industries to close outdated capacity by the end of September.
The return of Fed fears and choppy trading in bullion ensured a volatile session for gold miners. They turned higher after back-and-forth trading all day.
Focus was on the Fed's policy meeting next week, with the market again uneasy that the Fed might dial back its stimulus program sharply.
"Given Bernanke has been toning it down, I suspect we'll see a pretty dovish statement," said Lorne Steinberg, president of Lorne Steinberg Wealth Management.
"I think the market will be happy with the Fed statement, which to me is only temporarily postponing the inevitable (pullback of stimulus)."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 21.24 points, or 0.17 percent, at 12,647.90, after touching 12,614.56, its lowest point since July 18.
The index is barely up this year. Sentiment for Canadian stocks has taken a hit as volatile commodity prices and concerns about economic growth have kept investors away.
"The Canadian economy is going to be flatlining to showing plus 1 percent (growth) over the next 12 to 18 months," Steinberg said. "We find the Canadian stock market to be trading at relatively inflated valuations based on what we can buy elsewhere."
Six of the 10 main sectors on the index were in the red.
Energy shares fell 1.1 percent, mirroring weaker oil prices. In the group, Canadian Natural Resources (CNQ.TO) was down 4.5 percent at C$32.20 and played the biggest role of any single stock in driving the index lower.
TransCanada Corp (TRP.TO) ended little changed after Canada's No. 2 pipeline operator reported a 34 percent jump in second-quarter profit due to higher prices in its power-generation business.
The materials sector, which includes mining stocks, rose 0.9 percent.
But fertilizer producer Potash Corp fell 0.6 percent to C$38.14. The stock was hit by a number of price-target cuts from analysts on Friday after the company released quarterly results on Thursday that fell short of expectations. It also cut its outlook.
Financials, the index's most heavily weighted sector, lost 0.1 percent. Manulife Financial Corp (MFC.TO) fell 0.9 percent to C$18.30.
Celestica Inc CLS.TO reported a 19 percent rise in second-quarter profit on Friday, driven mainly by growth in its communications business. Shares of the contract electronics manufacturer jumped 6.3 percent to C$10.40.
Shares of Canfor Corp (CFP.TO) rose 7.4 percent to C$21.45 after the lumber producer reported a second-quarter profit late Thursday that topped market expectations.
Additional reporting by Solarina Ho; Editing by Peter Galloway