UPDATE 3-Toronto stocks dragged down by commodity tide

Tue Aug 5, 2008 5:33pm EDT
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* TSX falls nearly 2 percent as commodities fall

* Energy and materials sectors lead downside

By Leah Schnurr

TORONTO, Aug 5 (Reuters) - The Toronto Stock Exchange's main index slumped nearly 2 percent on Tuesday, battered by tumbling resource shares that followed commodity prices lower.

Weak prices for oil and gold set the tone early in the day with the index tumbling more than 300 points shortly after the opening bell.

With just three out of the TSX's 10 main sectors pushing lower, the materials sectors accounted for the bulk of the day's declines. Potash Corp of Saskatchewan POT.TO was the biggest drag on the benchmark, falling 12.8 percent, while in the oil patch Canadian Natural Resources CNQ.TO dropped 7.7 percent.

The large financial sector benefited from the drop in resource groups as investors opted to put their money in banks instead. Bank of Montreal BMO.TO rose 4.6 percent.

"The money's roaring out of commodities into financials," said Sal Masionis, a stockbroker at Brant Securities. "Anything to be not in the mining or energy sectors."   Continued...