3 Min Read
(Updates to midday)
* Energy stocks turn and retreat with oil price
* Financials sag on renewed U.S. banking worries
* Profit-taking weighs on fertilizer companies
TORONTO, June 18 (Reuters) - The Toronto Stock Exchange's main index was lower at midday on Wednesday, as energy and other resource issues fell while oil prices retreated.
The large financial sector also dragged the index lower as it was caught up in more fallout from the credit crunch and banking woes from south of the border.
Among the biggest decliners by weight, fertilizer companies Potash Corp of Saskatchewan (POT.TO) and Agrium (AGU.TO) slid following recent gains after the farmland in the U.S. Midwest was hit by severe flooding, pushing up corn prices.
"Maybe it's the fact that it's stopped raining finally in the Midwest and you can't keep ratcheting up your expectations for how much fertilizer is going to be used," said Gavin Graham, chief investment officer at Guardian Group of Funds, noting that some profit-taking could be in play.
The S&P/TSX composite index .GSPTSE was down 94.53 points, or 0.63 percent, at 14,974.30 with all but two of its 10 main sectors lower.
Potash Corp was the biggest net loser, shedding C$2.84, or 1.2 percent, to C$241.19, while Agrium was off C$1.30, or 1.2 percent, at C$111.70. The declines helped drag the materials sector down 0.6 percent.
Financials, which have shouldered the brunt of the impact from the credit crunch and troubles in the U.S. mortgage market, slid 1 percent.
Rattled bank stocks in New York set the gloomy mood after Morgan Stanley (MS.N) said its earnings were cut by more than half and Fifth Third Bancorp (FITB.O) said it would chop its dividend and raise capital.
"There's a sort of knee-jerk reaction," said Graham, adding that the fundamentals for Canadian banks are stronger and they have not been forced to cut dividends as U.S. institutions have.
"The Canadian assets, which are the vast majority of what's on the banks' balance sheets, are looking pretty good (and) the price of houses are still going up," said Graham.
The energy sector gave up earlier gains as the price of oil did likewise after data showed a surprise build in U.S. diesel and heating oil stocks.
Canadian Oil Sands Trust COS_u.TO was down C$1.22, or 2.2 percent, at C$53.63, while Petro-Canada PCA.TO eased 87 Canadian cents, or 1.5 percent, to C$58.18. Overall, the group lost 0.6 percent. ($1=$1.02 Canadian) (Reporting by Leah Schnurr; editing by Rob Wilson)