Weak resources to weigh on Toronto stocks

Tue Aug 5, 2008 9:17am EDT
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TORONTO Aug 5 (Reuters) - Toronto's main stock market index was set for a weak opening on Tuesday as investors return from an extended holiday weekend to lower resource prices and disappointing results from Cascades Inc CAS.TO.

Investors are expected to trade cautiously ahead of the U.S. Federal Reserve's decision on interest rates later in the session. The Fed is widely expected to leave its key rate at 2 percent.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE begins the holiday-shortened week at 13,496.53 after falling almost 100 points on Friday as resource shares were stung by falling metal prices and worries over limp demand. Canadian markets were closed on Monday for a civic holiday.

That weakness is expected to influence the early part of trading on Tuesday as falling crude oil and gold prices weigh on the resource-heavy market.

"Toronto will see a lower opening," said Steve Ibel, an institutional equities trader at Beacon Securities, in Halifax, Nova Scotia. "Commodities in general are weak. There isn't one commodity that is standing out, it's just a broad commodity sell off."

Oil shares, which account for about 30 percent of the overall market, are expected to led the charge lower as the price for U.S. crude oil dropped 1.5 percent to below $120 a barrel after touching a three-month low of $118 earlier in the session.

Gold shares could take it on the chin as the price for the precious metal dropped 1.5 percent to a low of $881.80 an ounce as commodities dropped across the board on worries about the global economic outlook.

Corporate results will remain in focus this week, with a bevy of companies expected to report, including BCE IncBCE.TO and Agrium Inc AGU.TO.

Cascades Inc CAS.TO said on Tuesday it swung to a quarterly loss as inflation and the impact of a robust Canadian dollar offset the company's cost-cutting measures.

Publishing and media group Quebecor Inc QBRa.TO said its second-quarter profit jumped 33 percent amid strength in its cable and newspaper segments.

Financial shares, which also make up a third of the overall index's weighting, could see activity after IGM Financial Inc IGM.TO said its Mackenzie Financial division would buy Saxon Financial Inc SFI.TO for C$287 million in cash. ($1=$1.04 Canadian) (Reporting by Scott Anderson; Editing by Bernadette Baum)