January 16, 2008 / 3:23 PM / 10 years ago

UPDATE 1-Toronto stocks drop 1 pct, commodities weigh

(Adds details, comment)

TORONTO, Jan 16 (Reuters) - The Toronto Stock Exchange’s main index pared some losses in morning trading on Wednesday amid bargain hunting in the financial sector, but was still down more than 1 percent as materials and energy issues tumbled.

Battered after a 381-point plunge on Tuesday, the TSX dipped as much as 150 points when trading began, in the wake of bearish commodity prices.

But the financial sector, the biggest by weighting, clawed back and was up 0.3 percent, mitigating some of the earlier losses, as investors scooped up bank stocks offering value after Tuesday’s fall.

The S&P/TSX composite index .GSPTSE was down 161.99 points, or 1.2 percent, at 13,154.79 in brisk trading.

Eight of the index’s 10 main sectors were in the red.

Leading the fall, fertilizer producer Potash Corp of Saskatchewan (POT.TO) was off C$3.83 at C$142.00 while Blackberry-maker Research In Motion RIM.TO tumbled C$2.75 to C$89.60.

The materials and energy sectors, down 1.8 percent and 1.6 percent respectively, were undercut by commodity prices that declined across the board.

Fears of a recession in the United States, Canada’s biggest trading partner, stoked fears that demand would soften for Canada’s key commodity exports.

Spot gold rebounded from early lows, but most base metals were soft while the key prices of crude oil and natural gas eased.

Banks rebounded after a drop of 2.3 percent in the previous session, when writedowns in the North American financial sector, linked to the U.S. subprime mortgage crisis, sparked a widespread selloff.

“You’ll definitely see these profit taking periods happen as the market moves into technically over-bought levels,” said Joe Ismail, technical analyst at Maison Placements Canada.

Royal Bank of Canada (RY.TO) was up 39 Canadian cents at C$48.90.

$1=$1.02 Canadian Reporting by Jonathan Spicer; Editing by Bernadette Baum

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