July 6, 2009 / 9:24 PM / 8 years ago

CANADA STOCKS-TSX drops 2.5 pct as commodities fall

* 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.

Suncor Energy (SU.TO), the top heavweight decliner, dropped 6.1 percent to C$30.85, while Goldcorp (G.TO) shed 5.6 percent $39.10. Fertilizer producer Potash Corp(POT.TO) was down 2.4 percent at C$110.60.

At one point, the S&P/TSX composite index .GSPTSE hit its lowest level in more than a week, falling more than 3 percent, but it managed to claw back some of that back by session’s end.

All of its 10 main groups were lower.

The index finished down 255.67 points, or 2.49 percent, at 10,027.43. The S&P/TSX 60 index fell 2.55 percent.

Last week’s bleak U.S. jobs data continued to send a chill through the market despite figures on Monday that showed the U.S. service sector contracted in June at a slower pace than expected. For details, see [ID:nWEN0263]

“The pullback that we’ve seen today, and in the last couple of weeks, it’s more people once again getting back to reality,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver. “This pause is a welcome one and it’s one that we need for the market to consolidate its gains.”

A ruling in a rate dispute between Canadian coal producer Teck Resources Ltd TCKb.TO and Canadian Pacific Railway Ltd (CP.TO) will cut the miner’s shipping costs and reduce CPR’s revenues. The railway’s shares fell 4.8 percent to C$43.08. [ID:nN06266313] Teck fell 2.1 percent to C$19.57, along with the downswing in mining shares.

Labopharm Inc’s DDS.TO shares jumped as much as 27 percent as investors expected the drug company to soon win U.S. approval of its once-daily depression treatment Trazodone. Shares finished up 10 percent at C$2.95. [ID:nN06248976]

$1=$1.16 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway

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