UPDATE 4-Toronto stocks dive as commodities retreat

Thu Oct 2, 2008 4:43pm EDT
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* Toronto stocks give up close to 7 percent

* Potash, Agrium lead declines after downgrade

* Financial-market uncertainty continues to weigh (Adds analyst comments, details, official closing data)

By Wojtek Dabrowski

TORONTO, Oct 2 (Reuters) - The Toronto Stock Exchange's main index fell nearly 7 percent on Thursday to its lowest level in more than two years, battered by concerns over the outlook for fertilizer producers and a drop in oil and gold prices.

Broader economic worries also lingered as investors and analysts tried to predict the final fate of a multibillion-dollar bailout package by the U.S. government aimed at saving the financial services sector.

"It's really brutal out there," said Sal Masionis, a stockbroker at Brant Securities. "The most important thing is the tightness in the money market and the capital markets as a whole."

Potash Corp of Saskatchewan POT.TO and Agrium Inc AGU.TO, two of the companies that helped power the Toronto market during the commodities boom, dropped more than 20 percent each after Merrill Lynch downgraded the stocks because of uncertainty over earnings for the fertilizer sector. [ID:nN02254052].

The S&P/TSX composite index .GSPTSE plunged 813.97 points, or 6.95 percent, to 10,900.54.   Continued...