3 Min Read
* TSX falls 87.38 points to 10,307.40
* Erases early 166-point surge
* Energy shares lead turnaround (Adds details and comments)
By Frank Pingue
TORONTO, June 16 (Reuters) - Toronto's main stock index closed lower on Tuesday despite a solid start to the day as investors continued to pocket gains from the index's remarkable 40 percent rally from the five-year low it hit in March.
Energy companies led the TSX index's selloff, its third straight, as concerns about the strength of the economic recovery sent oil prices further from the near eight-month high above $73 a barrel they reached last week. [ID:nN16279408]
Suncor Energy SU.TO shares slid 3.4 percent to C$36.18, while EnCana Corp (ECA.TO), North America's largest natural gas producer, dropped 2.2 percent to C$58.99. Both companies were among the biggest drags on the TSX index.
Eight of the TSX index's 10 sectors ended lower, with the energy group's 2.4 percent fall the biggest.
The TSX rallied at the open, rising 166 points, or 1.6 percent, before steadily relinquishing the gains and sputtering to its lowest close since June 3.
Still, the lower close did not generate much concern from investors since it was just last week that the TSX had rallied to 10,726.01, which was 43 percent above the five-year low it reached in March.
"Just recognition probably by some investors out there that we've had a pretty darn good run," said Gareth Watson, Canadian Equity Advisor at ScotiaMcLeod. "The pause is also recognition that market momentum is potentially going to slow down a bit."
The S&P/TSX composite index .GSPTSE closed 87.38 points, or 0.84 percent, lower at 10,307.40. The index is already down 3 percent this week after rallying for four straight weeks.
Shares of gold miners helped to cushion the index's slide given the rally in gold prices, whose appeal as a hedge against potential oil-induced inflation got a boost from the weak U.S. dollar and higher oil prices. [ID:nLG679421]
Another company that helped keep the TSX from falling further was auto-parts supplier Magna International Inc MGa.TO. The company's shares rose 6.7 percent to C$43.72 after an analyst said global auto production has bottomed and should rebound in the second half of the year. [ID:N16280085]
Still, it was not enough to keep the index from its first three-day slide since March 13.
"The market was strong out of the gate this morning and there was no follow-though and it just began to drift, and when there was even less follow-through it went negative," said Bruce Latimer, a trader at Dundee Securities.
"We just have a bit of a consolidation going on of the runup of the last few weeks. But I'm not really too worried since Toronto just hit a new high last week, so to see it pull back here is normal."
$1=$1.13 Canadian Editing by Peter Galloway