3 Min Read
(Refiles to fix spelling error in paragraph 8)
*Oil and gold prices drop on firmer U.S. dollar
*Canada trade surplus narrows more than foreseen in July
*Lululemon rises after reporting rise in quarterly profit
TORONTO, Sept 11 (Reuters) - The Toronto Stock Exchange's main index fell on Thursday morning, pulling back from Wednesday's big rally, as resource stocks dropped on weaker commodity prices and banks declined on concerns about the fate Lehman Brothers and the health of the U.S. financial sector.
The heavyweight energy sector fell 1.8 percent as the price of crude dropped on a firmer U.S. dollar and concerns over weakening demand. Canadian Natural Resources (CNQ.TO) was down 1.8 percent at C$77.57.
The materials group fell 2.5 percent as the price of bullion and some base metals dropped. First Quantum Minerals (FM.TO) sank 4.8 percent to C$49.16.
Financials declined 1 percent with Royal Bank of Canada (RY.TO) down 1.1 percent at C$49.00 as worries about the health of the U.S. financial sector weighed after investment bank Lehman Brothers LEH.N failed to announce deals to raise capital.
"Fifty-percent of our market is commodity-related and commodities are having very hard time of it," said John Kinsey, portfolio manager at Caldwell Securities Ltd.
"The credit situation in the U.S. has got everyone very nervous. They think it will cause deep problems in the economy and that rolls back into the commodities. If the economies of the world go down, then the demand for commodities will go down."
The S&P/TSX composite index .GSPTSE was down 178.95 points, or 1.4 percent, at 12,318.20, with all of its 10 main groups lower.
The pullback ate into the 350.39-point, or 2.9 percent, bargain-hunting rally on the index on Wednesday.
In economic news, Statistics Canada data showed Canada's trade surplus narrowed more than expected in July as imports rose twice as fast as exports, and energy exports fell for the first time in nine months. [ID:nN11459857]
As well, price increases for new homes in Canada eased in July for the sixth month in a row, advancing 0.1 percent, according to Statistics Canada, which added to evidence of a cooling housing market. [ID:nN11710]
Yoga-inspired apparel retailer Lululemon Athletica Inc LLL.TO (LULU.O) rose 1.5 percent to C$19.51 after it reported a sharp rise in second-quarter profit. [ID:nN11395324]
Canada's No. 2 grocer, Empire Co Ltd (EMPa.TO), reported a a big drop in first-quarter profit as results were hampered without last year's big capital gains, the company said. But adjusted earnings rose as growth in the core Sobeys supermarket chain offset weakness in the real estate division. [ID:nN05398377]. Empire shares rose 1.3 percent to C$48.50.
$1=$1.08 Canadian Reporting by Jennifer Kwan; Editing by Peter Galloway