3 Min Read
* Oil falls below $58, drags down energy sector
* Teck Cominco down 16 pct, extends Tuesday's decline
* Canadian economy "sluggish" through H1/2009, BoC says
TORONTO, Nov 12 (Reuters) - The Toronto Stock Exchange's main index .GSPTSE fell 3.8 percent on Wednesday morning after prices of oil and metals dropped, pulling down energy and material shares.
The index's energy sector fell 2.6 percent as oil slipped to $58 a barrel on expectations of weaker demand as global stock markets headed lower. [ID:nSP373294]
"The trend keeps on going down lower. That's bad, especially for oil sands and the new projects that are being built. Some of the projects are going to be delayed or cut back," said Sal Masionis, a stockbroker at Brant Securities.
Shortly after 10:40 a.m. (1540 GMT), the S&P/TSX composite index .GSPTSE was down 360.30 points, or 3.8 percent, at 9,063.70. All 10 main groups were lower.
Materials were dragged 5.7 percent lower as gold, copper and aluminum prices softened as worries about demand persist in a world economy that is in an economic downturn.
"Materials are in a tough, tough situation. Until the economy turns around materials will probably be drifting down," Masionis said.
Teck Cominco TCKb.TO, the most active issue, lost 16 percent to C$7.35, extending Tuesday's 20.1 percent loss.
The diversified miner, pressured by fears that demand for metallurgical coal is dropping, said it was in talks to sell gold assets as part of a strategy to pay down a bridge loan to finance the Fording Canadian Coal Trust buy. [ID:nN12280449] On Tuesday, it denied any plans to sell equity to help pay off the loan.
Potash Corp (POT.TO), part of the materials group and the top net loss leader, declined 4 percent to C$93.18.
Worries about the economy have been a constant drag on the Toronto index as well as other global markets. Speaking in Toronto, Bank of Canada Senior Deputy Governor Paul Jenkins said the near-term outlook for the Canadian economy is for sluggish growth through the first half of 2009. [ID:nOTW000176]
He also said the Bank of Canada is likely to have to cut interest rates again to reach its 2 percent inflation target over the medium term. ($1=$1.22 Canadian) (Reporting by Ka Yan Ng; Editing by Frank McGurty)