UPDATE 1-Toronto stocks tumble on commodity shares

Thu Oct 2, 2008 11:02am EDT
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*U.S. Senate approval of bailout fails to lift TSX

*Potash, Agrium tumble after Merrill Lynch downgrade

*Energy sector falls 5.8 percent as oil slides below $96

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TORONTO, Oct 2 (Reuters) - The Toronto Stock Exchange's main index fell more than 500 points on Thursday after a brokerage chopped its ratings on two fertilizer stocks that had powered the market during the commodities boom, while oil and gold prices also sank.

Potash Corp of Saskatchewan POT.TO dropped 24 percent and Agrium Inc AGU.TO more than 22 percent after Merrill Lynch downgraded the issues because of what it said was an uncertain earnings outlook for the sector. [ID:nN02254052].

The hefty materials sector, which includes fertilizer companies, led the market down, tumbling 11.1 percent.

The energy sector also slid 5.8 percent as oil retreated below $96 a barrel on persistent concerns over weakening fuel demand in a cooling global economy. [ID:nSP360782] The U.S. Senate's passage of a financial rescue plan failed to dispel those worries.

Gold futures tumbled more than 3 percent as the U.S. dollar strengthened. Barrick Gold ABX.TO tumbled 7.5 percent to C$36.80.   Continued...