June 17, 2009 / 2:27 PM / in 8 years

CANADA STOCKS-Weak commodity prices yank TSX sharply lower

* TSX down 2.02 percent at 10,098.98

* Materials group, down 4.1 percent, leads TSX lower

* Energy shares falter on weak oil prices (Adds details, quotes)

By Jennifer Kwan

TORONTO, June 17 (Reuters) - Toronto’s main stock market index dropped sharply on Wednesday morning, extending losses from the previous session, as falling oil and metals prices pulled the market down.

Among the big commodity-related names that fell were Suncor Energy (SU.TO), down 3 percent at C$35.10, and Potash Corp of Saskatchewan (POT.TO), down 8 percent at C$111.17.

The TSX index’s energy sector dropped 2.7 percent as the price of oil CLc1 fell below $70 a barrel.

Its materials group fell 4.1 percent as metals prices weakened as doubts about the global economic recovery heightened demand worries. [ID:nLH367230] Copper closed in on a two-week low.

The price of bullion was also lower, but pared earlier losses as the U.S. dollar slipped due to lower-than-expected U.S. inflation data. [ID:nLH366911]

“The commodity stocks are getting hurt here,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier. “They’ve risen so dramatically here that people look to take some profits.”

At 9:58 a.m. (1358 GMT), the S&P/TSX composite index .GSPTSE was down 208.42 points, or 2.02 percent, at 10,098.98, with nine of its 10 main sectors lower. The consumer staples group was up 0.2 percent.

Also weighing heavily on the index were Research In Motion RIM.TO, which dropped 3.8 percent to C$87.49, while TransCanada Corp (TRP.TO) dropped 5.6 percent to C$31.20.

The weakness extends losses in the previous session, but the recent selloff has not generated much concern as market watchers have expected a retreat following the TSX index’s roughly 40 percent rally from March lows.

$1=$1.14 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway

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