UPDATE 2-Toronto stocks slide on U.S. Fannie/Freddie fears

Fri Jul 11, 2008 12:31pm EDT
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(Updates to midday with details)

*TSX retreats amid credit crunch worries

*Financials hurt by concerns over U.S. mortgage giants

*Resources remain higher as commodities climb

TORONTO, July 11 (Reuters) - The Toronto Stock Exchange's main index was lower at midday on Friday, erasing early gains, as it succumbed to intensifying anxiety in the United States over more fallout from the credit crunch.

Financial stocks were knocked down 1.9 percent on worries that U.S. mortgage giants Freddie Mac FRE.N and Fannie Mae FNM.N could run short of capital.

The credit concerns, as well as continuing worries over the prospects for economic growth, took the index lower, leaving only its two big resource sectors -- energy and materials, which were lifted by climbing commodities -- on the upside.

"I think there's a lot of spillover from the Fannie Mae, Freddie Mac decline that is affecting us," said Douglas Davis, president at Davis-Rea.

"Even though you've had some increase in price of oil, and, in fact, oil has gone to new highs, every other part of the market is suffering."   Continued...