UPDATE 2-Toronto stocks flat as financials weigh

Mon Aug 18, 2008 3:05pm EDT
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(Updates to midafternoon)

* TSX retreats from earlier gains

* Banks weighed by worries over credit crunch fallout

* Gold producers gain along with commodity

TORONTO, Aug 18 (Reuters) - The Toronto Stock Exchange's main index was little changed on Monday afternoon, easing off an earlier advance while weak financials offset gains by resource shares as worries over more fallout from the credit crisis took hold.

The materials sector managed to hold on to its advance as it was lifted by gold producers, which gained along with their underlying commodity. Goldcorp (G.TO: Quote) rose more than 3 percent.

But the large financial sector weighed as it was dragged down by a selloff in banks south of the border, as mortgage finance giants Fannie Mae FNM.N and Freddie Mac FRE.N tumbled after a report suggested the U.S. Treasury could recapitalize the companies.

Among the laggards on Bay Street, Canadian Imperial Bank of Commerce (CM.TO: Quote) slid more than 1 percent. The major Canadian banks are set to report quarterly results next week.

"Until the results out of our banks come out, I think that our market is going to go in limbo for a while," said Joe Ismail, technical analyst at Maison Placements Canada.   Continued...