UPDATE 1-Toronto stocks hobbled by U.S. recession talk

Tue Feb 5, 2008 10:15am EST
 
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TORONTO Feb 5 (Reuters) - The Toronto Stock Exchange's main index was sharply lower on Tuesday morning after a report bolstered fears that the U.S. economy was headed toward recession, and commodity prices weighed on resource shares.

The S&P/TSX composite index .GSPTSE was down 121.53 points, or 0.9 percent, at 13,136.63 after a report by the Institute for Supply Management showed the U.S. services sector contracted to a level not seen since 2001. For details, see: [nN05112825]

The dark clouds over the United States -- the world's biggest economy and Canada's biggest trading partner -- rocked commodities as investors priced in the prospect of lower demand.

Oil accelerated its earlier decline, off C$1.70 at C$88.32 a barrel, while a basket of base metals prices were well lower. Gold was down more than $6 to near $886 an ounce.

"Everything is working against us here again today, and every day that goes by seems to confirm, more and more, that we're obviously looking at some kind of a recession in the United States," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

"Nothing here this morning seems to have changed that."

The TSX's biggest sectors led the fall, with financials down 1 percent, energy down 1.4 percent and materials down 1.4 percent.

Manulife Financial MFC.TO stumbled 35 Canadian cents to C$37.27, while Suncor Energy SU.TO tumbled C$1.73 to C$94.25.   Continued...