UPDATE 2-Commodity retreat drags down Toronto stocks

Thu Oct 2, 2008 12:11pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* Potash, Agrium tumble after Merrill Lynch downgrade

* Energy sector falls 5.8 percent as oil slides to $95

* U.S. Senate approval of bailout fails to lift mood (Adds analyst comments, details, updates figures)

TORONTO, Oct 2 (Reuters) - The Toronto Stock Exchange's main index sank more than 5 percent on Thursday as two major fertilizer companies plunged after a ratings downgrade, while oil and gold prices also fell.

Potash Corp of Saskatchewan (POT.TO: Quote) and Agrium Inc (AGU.TO: Quote), which had helped power the market during the commodities boom, dropped 20 percent after Merrill Lynch downgraded the stocks because of what it said was an uncertain earnings outlook for the sector. [ID:nN02254052].

The hefty materials group, which includes fertilizer companies, led the market down, tumbling 11 percent.

The energy sector slid 5.8 percent as oil retreated to $95 a barrel on persistent concerns over weakening fuel demand in a cooling global economy [ID:nSP360782], and as the U.S. Senate's passage of the revised financial rescue plan failed to dispel those worries.

Gold futures dropped 4 percent on a firmer U.S. dollar and profit-taking, with Barrick Gold (ABX.TO: Quote) down 8 percent at C$36.58.

The combination of factors hit the Toronto market hard, said Joe Ismail, technical analyst at Maison Placements Canada. As well, investors were cautious despite the passage of the revised $700 billion rescue plan for Wall Street.   Continued...