UPDATE 1-Toronto stocks fall on lower oil, banks bounce

Wed Jul 16, 2008 11:22am EDT
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*TSX index extends losses as resource issues fall

*Bargain-hunting in financials cushions the blow

*TransCanada shares drop as pipeline expansion announced

TORONTO, July 16 (Reuters) - Toronto Stock Exchange's main index was lower at midmorning on Wednesday as resource shares dropped on weaker prices for oil and other commodities.

Oil and gas shares dropped more than 3 percent as oil fell to around $133 a barrel after a U.S. government report showed a surprise leap in crude supplies.

The resource-laden materials subgroup was down 2.5 percent as gold dropped below $970 an ounce.

The S&P/TSX composite index .GSPTSE was down 147.48 points, or 1.1 percent, at 13,210.08 in see-saw trading, with four of its main subgroups lower. On Tuesday the market plunged almost 400 points on anxiety about the health of the U.S. financial sector and falling oil prices.

"That really woke the market up and the TSX really took it on the chin," said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.   Continued...