UPDATE 3-Banks, Canadian Tire drag Toronto stocks lower

Thu Aug 7, 2008 5:51pm EDT
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(Adds details, quotes)

* TSX index falls as financials hit by credit crunch fears

* Canadian Tire down after cuts earnings forecast

* Energy sector gains along with oil

By Leah Schnurr

TORONTO, Aug 7 (Reuters) - The Toronto Stock Exchange's main index finished lower on Thursday in a broad decline sparked by losses in the financial-services sector on nagging worries over more fallout from the credit crunch.

Canadian Tire (CTCa.TO: Quote) was the biggest drag on the index after it reported a lower quarterly profit and cut its earnings forecast for the year. Shares of the country's largest auto parts and household goods retailer shed 7.7 percent.

Among financials, Manulife Financial (MFC.TO: Quote) lost 3.7 percent after it said its profit fell, hurt by weak equity markets, a stronger Canadian dollar and tax-related provisions.

Banks got caught up by rising fears of more fallout from the U.S. credit crisis as insurer American International Group (AIG.N: Quote) reported a big loss after more writedowns.   Continued...