November 6, 2008 / 10:37 PM / 9 years ago

CANADA STOCKS-TSX index slumps as commodities retreat

* Energy sector falls 6.8 percent as oil slides

* Materials sink 6.9 percent as metal prices fall

* Canadian Natural off 11.6 pct as project costs rise (Adds quote, details)

By Jennifer Kwan

TORONTO, Nov 6 (Reuters) - The Toronto Stock Exchange’s main index dropped more than 3 percent on Thursday as energy and materials issues fell along with commodity prices, which were pressured by worries about a faltering world economy.

The oil and gas sector dropped 6.8 percent as the price of oil sank to $60.77 a barrel on fears that economic softness would undercut global demand. [ID:nSYD166191]

The materials group sank 6.9 percent with Potash Corp of Saskatchewan (POT.TO) down 7.6 percent at C$94.25.

Stocks that weighed on the TSX index included Canadian Natural Resources (CNQ.TO), down 11.6 percent at C$53.40. Canadian Natural was a major drag as it said it would slash spending next year. [ID:nBNG401176]

Also leading the slide were Suncor Energy SU.TO, which fell 11.2 percent to C$24.75, and Research In Motion RIM.TO, which was down 9 percent at C$56.80

The S&P/TSX composite index .GSPTSE closed down 331.79 points, or 3.36 percent, at 9.555.41, with all but one of the 10 sectors lower. The consumer staples group rose 0.4 percent.

The market got a brief respite this week from the U.S. presidential election, rising 4 percent on Tuesday, but that rally faded as the main index turned lower in both following sessions.

“Now the focus is turning to the earnings story and the market, frankly, doesn’t much like what it’s seeing. The earnings story is looking quite gloomy and the markets are taking a big dive on that,” said Elvis Picardo, an analyst and strategist at Global Securities.

“All the data points we’ve been getting in recent weeks have been quite gloomy, not so much in Canada but in the U.S. There’s obviously a tremendous amount of concern about what a global recession would do to corporate earnings all over the world including here in Canada,” Picardo said.

The financial group fell 0.4 percent as brokerages Canaccord Capital CCI.TO and GMP Capital Trust GMP_u.TO reported weaker quarterly results because of market volatility. [ID:nN06412806]

Canaccord was down 9.3 percent at C$5.76, while GMP finished up 1.8 percent at C$5.01.

Manulife Financial (MFC.TO) slipped 1.7 percent to C$25.35. Earlier, the big insurer reported lower quarterly profit but said it was able to get financing to shore up its regulatory capital position. [ID:nN06299759]

“For the market overall, we’re looking to see if it can hold these levels because it’s kind of getting down to a range where it is testing the lows we had. It’s going to be critical, technically, what the market does here over the next day or so,” said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd, in Calgary.

The market hit a low for the year of 8,537.34 on Oct 27.

U.S. stocks sagged on disappointing corporate outlooks and bleak sales from major retailers, which fanned fears of a deepening economic downturn.

The Dow Jones industrial average .DJI fell 20.85 points, or 3.49 percent, to 576.21, while the Nasdaq Composite Index .IXIC ended down 72.94 points, or 4.34 percent, at 1,608.70.

$1=$1.20 Canadian Reporting by Jennifer Kwan; Editing by Peter Galloway

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