CANADA STOCKS-TSX falls 3.4 pct, hit by oil, metals prices

Tue Nov 11, 2008 11:33am EST
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* Deepening economic gloom pressures all sectors

* Resource issues fall as oil drops below $59 a barrel

* Light volume in holiday-thinned trade

TORONTO, Nov 11 (Reuters) - The Toronto Stock Exchange's main index fell 3.4 percent on Tuesday morning in a decline led by energy and materials issues, which dropped on falling oil and metals prices.

Investor gloom about the economic environment deepened and helped push oil prices below $59 a barrel, while a firmer U.S. dollar put pressure on metals prices. [ID:nLB342361]

As a result of the commodity weakness, the Toronto index's oil and gas sector fell 4.8 percent and the materials group dropped 7.2 percent.

The day before, both sectors were beneficiaries of a commodity-driven rally that was sparked by China's plan to pump $586 billion into its economy. But the China euphoria was short-lived as world stock markets returned to focusing on underlying economic worries. [MKTS/GLOB]

"It seems that each story that we get from a government standpoint to try to provide some type of coordinated support gives us but a brief rally," said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.

"And then the market focuses back on the underlying economics of the issue, which are obviously very weak."   Continued...