August 18, 2010 / 3:08 PM / 7 years ago

CANADA STOCKS-Energy weighs on TSX, Potash limits fall

* TSX slips 0.14 percent to 11,711.86

* Potash Corp. up 3 pct, BHP to take offer to shareholders

* Energy decline is main drag as oil prices weaken (Adds details)

By Ka Yan Ng

TORONTO, Aug 18 (Reuters) - Toronto’s main stock index was lower on Wednesday morning on a steep drop in energy shares but the fall was limited by strength in $39-billion takeover target Potash Corp.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 16.78 points, or 0.14 percent, at 11,711.86, after briefly popping into positive territory.

Seven of the index’s 10 main groups were lower, with a 0.96 percent drop in the energy group, due to a falling oil price, providing the main drag on the index.

Oil prices fell to a one-month low below $75 after an industry report on Tuesday showed a sharp increase in petroleum inventories in the United States. [O/R]

Suncor Energy (SU.TO) fell 1.2 percent to C$33.09, while fellow oil company Canadian Natural Resources (CNQ.TO) lost 1.6 percent to C$34.18.

“One of the big things is the price of oil is down dramatically today. Gold’s off over $5 too. It’s just general malaise about the market,” said Sal Masionis, stockbroker at Brant Securities.

“But Potash is still on a tear and that’s the highlight of the whole market. The market is assuming a higher price is coming.”

Market focus was on developments in BHP Billiton’s (BHP.AX) (BLT.L) attempt to buy Potash Corp (POT.TO). BHP said it would take its $130-a-share offer directly to shareholders, bypassing Potash Corp’s board, which a day earlier called the bid “grossly inadequate”. [ID:nSGE67H031]

Potash Corp gained 3.1 percent to C$151.92.

The Potash news helped keep the index’s materials group higher, up 0.4 percent, but an easing price of gold after its recent rally weighed on key gold-mining stocks. Barrick Gold (ABX.TO) was down 0.33 percent at C$45.73, while Kinross K.TO fell 0.45 percent to C$15.57.

Analysts also said there was some profit-taking at play after the TSX rallied 1.52 percent on Tuesday and touched its firmest level in nearly a week.

“Yesterday was a big up day so maybe people are just taking some profits here,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

$1=$1.03 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway

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