UPDATE 2-Toronto stocks swept lower by big commodity selloff

Tue Aug 5, 2008 11:39am EDT
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(Adds details and analyst comments)

TORONTO Aug 5 (Reuters) - Toronto's main stock market index plunged more than 300 points on Tuesday morning as a broad sell-off in oil and other key commodities knocked the index to its lowest level since late March.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 294.87 points, or 2.2 percent, at 13,201.66 after dropping as low as 13,130 earlier in the day.

It was the index's lowest level since March 25, when it hit 13,019.72. Its low for 2008 is 11,982.89, set on Jan 22.

Only five of the TSX index's main groups were down but a big 6.9 percent decline in the resource-heavy materials group and a 5.2 percent fall in oil issues knocked it for a loop.

Fertilizer producer Potash Corp POT.TO was down 10.5 percent and oil company Canadian Natural Resources CNQ.TO dropped 6.6 percent.

U.S. crude oil fell 0.8 percent to around $120.50 a barrel after touching as low as $118 earlier in the session as worries about a tropical storm in the Gulf of Mexico lessened.

Meanwhile, resource shares were led lower by fertilizer producers as potash prices slipped on fears of a global economic slowdown.

Gold, which is seen as a hedge against inflation, dropped to as low as $880 an ounce from $895.55, swept up in the broad commodity sell-off and hit by a rising U.S. dollar.   Continued...