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: Quote) dropped 24 percent and Agrium Inc (AGU.TO: Quote) 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: Quote) tumbled 7.5 percent to C$36.80.   Continued...