October 1, 2008 / 4:00 PM / 9 years ago

UPDATE 2-Toronto stocks lower on oil ahead of bailout vote

*TSX falls after Tuesday’s 4 pct rally

*Energy sector drops 3.8 percent as oil slides

*Teck to reorganize mining business, change its name

(Adds details, analyst’s comments, updates figures)

TORONTO, Oct 1 (Reuters) - The Toronto Stock Exchange’s main index fell on Wednesday morning, hit by dropping oil prices as the market awaited a key vote by the U.S. Senate on the revised $700 billion bailout for the financial industry.

The index rallied 4 percent on Tuesday on renewed hopes a rescue deal would be passed this week, but jitters crept back into markets on Wednesday ahead of a crucial vote by the Senate, which is expected after 7:30 p.m. (1130 GMT).

Shortly after 11:15 a.m., the S&P/TSX composite index .GSPTSE was down 163.64 points, or 1.39 percent, at 11,589.26, with six of its 10 main groups lower.

“Until the bill in the U.S. actually gets passed there’s going to be uncertainty,” said Anil Tahiliani, head of research at McLean & Partners Wealth Management Ltd., in Calgary, Alberta. “People want to see what the final plan looks like given there will be slight changes to the original plan.”

Bleak U.S. employment, manufacturing and U.S. oil inventory data helped to sour the mood on the Toronto market, Tahiliani added.

The energy group, which staged a comeback on Tuesday after a big 10.6 percent tumble at the start of the week, led the way down on Wednesday, falling 3.8 percent, as oil fell below $97 a barrel ahead of weekly U.S. oil inventory data, which showed higher than foreseen oil inventories. [ID:nN01504412]

The financial services sector fell 0.2 percent with Royal Bank of Canada (RY.TO) down 1 percent at C$50.00.

Materials were down 0.8 percent with Potash Corp of Saskatchewan Inc (POT.TO) dropping 3 percent to C$133.81, while Teck Cominco Ltd TCKb.TO was down 6.4 percent at C$28.30.

Teck announced the creation of five strategic business units to specialize in copper, metallurgical coal, zinc, gold and energy and said it would change its name to Teck Resources. [ID:N01506473]

BMO Capital Markets cut Teck shares to “underperform” from “market perform” and reduced the price target for the company to C$30 from C$45. [nWNAB4360] On Tuesday, Fording Canadian Coal Trust FDG_u.TO unitholders approved a $14 billion takeover by Teck. [nN30448639].

In the oil sector, Suncor Energy (SU.TO) fell 8.3 percent to C$40.34, while Canadian Natural Resources (CNQ.TO) was down 4.1 percent at C$70.03.

The gold subgroup rose 1.5 percent with Goldcorp (G.TO) up 1.8 percent at C$34.06.

$1=$1.06 Canadian Reporting by Jennifer Kwan; Editing by Peter Galloway

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