UPDATE 1-Toronto stocks sag, weighed down by commodity stocks

Wed Sep 3, 2008 11:26am EDT
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* Sharp drop in oil prices pulls down energy shares

* Mining stocks hurt by oil's slide and firm U.S. dollar

* Decline comes after drop of more than 3 percent Tuesday

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TORONTO, Sept 3 (Reuters) - The Toronto Stock Exchange's main index fell on Wednesday morning, extending its losses after a big drop the previous session, pulled down by weakness in commodity-related stocks.

The key energy sector was down 2.3 percent as oil fell to around $108 a barrel on slowing demand in the United States and other consuming nations, and as concerns over Hurricane Gustav eased. EnCana Corp (ECA.TO: Quote) slipped 2.2 percent to C$73.97.

Materials, home to resource stocks, dropped 2.6 percent, as gold sagged on oil's slide and on a firmer U.S. dollar. Barrick Gold (ABX.TO: Quote) fell 3.3 percent to C$33.85, while copper miner First Quantum Mining (FM.TO: Quote) slipped 5.9 percent to C$61.18.

The two sectors, which account for about half of the index's total weight, began the day with choppy activity and treaded in positive territory before slumping back down.

The volatility reflects caution on the market, said Julie Brough, vice president at Morgan Meighen & Associates.   Continued...