UPDATE 1-Toronto stocks flat as oil spurs inflation worry

Thu Jan 3, 2008 10:45am EST
 
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By Jonathan Spicer

TORONTO Jan 3 (Reuters) - The Toronto Stock Exchange's main index was flat on Thursday morning as the effect of bullish oil and gold prices on commodity shares was offset by worry over inflation, which undercut financial shares.

Materials and energy issues led the upside, yanked higher by spot gold and crude oil prices, which remained near record highs.

Strong crude oil prices, which reached $100 a barrel on Wednesday, stoked global inflation fears. That soured banks and other financial institutions, which are typically sensitive to inflation jitters.

"The financial index is expected to resume the downtrend as credit woes in the United States protract, and the banks are deep in the woods on that," said John Ing, president of Maison Placements Canada.

The S&P/TSX composite index .GSPTSE was up 2.52 points at 13,929.28. Seven of the index's 10 main groups were in the red, including a 0.7 percent drop in financials, the biggest sector by weight.

Financial institutions were the four biggest losers by weight by midmorning, with Bank of Nova Scotia BNS.TO tumbling 60 Canadian cents to C$49.03, and Royal Bank of Canada RY.TO, the country's biggest bank, off 48 Canadian cents at C$49.72.

The utilities sector dropped 0.3 percent and consumer discretionary fell 0.6 percent.   Continued...