CANADA STOCKS-TSX drops 2.5 pct as commodities fall

Mon Jul 6, 2009 5:21pm EDT
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* TSX closes down 2.5 percent at 10,027.43

* Energy sector falls 3.81 percent as oil price drops

* Materials sector down 4.1 percent on lower metals prices (Adds details, commentary)

By Ka Yan Ng

TORONTO, July 6 (Reuters) - Toronto's main stock index closed a steep 2.5 percent lower on Monday as commodity prices fell and worry about the pace of the global economic recovery intensified.

Last week's U.S. employment data, which showed the economy shed more jobs than expected in June, continued to echo through the market, dampening hopes that the global economy is on the verge of recovery.

Commodity prices -- the price of oil sank to around $64 a barrel, while gold fell towards $920 an ounce -- were the biggest source of direct pressure on the resource-heavy Toronto index. [ID:nSYD537953] [ID:nL6606347] The energy group fell 3.81 percent and the mining-heavy materials group was off 4.05 percent.

"TSX is taking it on the chin today because of the oils," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd in Calgary, Alberta.

Seven of the top 10 losing stocks were from the TSX index's materials and energy groups, including Petro-Canada PCA.TO, off 5.24 percent at C$39.40, and EnCana Corp ECA.TO down 4.16 percent at C$53.05.   Continued...