UPDATE 1-Toronto stocks drop 1 percent as resources retreat

Tue Jul 8, 2008 11:34am EDT
 
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(Updates to midmorning)

*TSX extends recent declines to tumble 1 percent

*Resources lead the fall as commodity prices drop

TORONTO, July 8 (Reuters) - The Toronto Stock Exchange's main index tumbled on Tuesday morning in volatile trading, extending recent declines, as the influential resource sector was stung by falling oil and other commodity prices.

The energy and materials sectors, which make up about half of the index, were responsible for the lion's share of the losses, falling 3.7 percent and 2.8 percent, respectively.

The benchmark S&P/TSX composite index .GSPTSE was down 136.03 points, or 0.99 percent, to 13,576.77, though only three of its 10 main sectors fell. The index has lost about 6 percent of its value since last Wednesday, buffeted by declines in resource shares and economic worries.

If the key index closes around these levels, it will be down about 10 percent from its June 6 life high of 15,154.77.

"I think it's fair enough to say fear seems to be gripping the market," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, adding that broader economic worries over the prospects for growth continue to nag as earnings season gets under way.

The price of U.S. light crude oil CLc1 dived more than 4 percent to below $136 a barrel, as the U.S. dollar gained and worries eased over an Atlantic hurricane. The commodity has shed about $10 this week.   Continued...