CANADA STOCKS-TSX falls as oil prices rattle energy shares

Fri May 15, 2009 12:55pm EDT
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* TSX down 59.73 points at 9,789.47

* Energy sector sheds 2.5 percent (Recasts, updates prices, adds details)

By Frank Pingue

TORONTO, May 15 (Reuters) - Toronto's main stock index erased an early gain and headed lower on Friday afternoon as energy shares buckled under oil prices that fell further from the six-month high they reached earlier this week.

The energy sector was down 2.5 percent, the steepest drop among all the TSX's sectors, and its heavy weighting more than offset the index's pockets of strength.

Shares of Suncor Energy SU.TO, the biggest drag on the index, fell 3.6 percent to C$33.38, and Canadian Natural Resources CNQ.TO, dropped 3.5 percent to C$57.60.

The skid in energy stocks came as the price of oil dropped below $58 a barrel due to weak global demand. [ID:nSIN460588]

""You've the oil price down ... so that is certainly going to influence energy equities," said Gareth Watson, Canadian equity advisor at ScotiaMcLeod. "Plus the buyers are not out there to continue the support of the positive momentum."

At 12:45 p.m. (1645 GMT), the S&P/TSX composite index .GSPTSE was down 59.73 points, or 0.61 percent, at 9,789.47. Earlier in the session the TSX had rallied as much as 97.86 points, or 0.99 percent.

Moves in the TSX could be volatile as the session wears on as volume slows to a trickle as traders may opt to get a head start on the long weekend in Canada. The TSX will be closed Monday for the Victoria Day holiday.

($1=$1.17 Canadian) (Additional reporting by Jennifer Kwan; editing by Peter Galloway)