August 19, 2008 / 5:02 PM / in 9 years

UPDATE 2-Toronto stocks rebound as commodities gain

(Updates to midday)

* TSX rebounds as commodity prices climb

* Resource shares pull index higher

* Banks lead downside amid more credit crunch woes

TORONTO, Aug 19 (Reuters) - The Toronto Stock Exchange’s main index pushed higher on Tuesday, fueled by a rebound in commodity prices that overshadowed worries over the U.S. economy and more fallout from the credit crisis.

The index recovered from an earlier drop of more than 100 points as gold an oil prices reversed course to climb higher, lifting Bay Street’s heavyweight energy and materials sectors. In the oil patch, Canadian Natural Resources (CNQ.TO) rose more than 4 percent.

But the broader market was held back by concerns over the outlook for the U.S. economy following data that suggested a further deterioration in the housing market, while wholesale prices jumped in July.

Financials sagged as shares were hurt by a forecast that U.S. investment bank Lehman Brothers LEH.N will likely take a further $4 billion in writedowns in the third quarter. See: [ID:nBNG259145]. Canadian Imperial Bank of Commerce (CM.TO) slid more than 3 percent.

The S&P/TSX composite index .GSPTSE was up 57.70 points, or 0.44 percent, at 13,177.07 but just three of its 10 main sectors were in positive territory.

The energy and materials groups provided the lion’s share of the support, gaining 2.9 percent and 3.3 percent, respectively. Canadian Natural was up 4.6 percent at C$83.28, while Potash Corp of Saskatchewan (POT.TO) rose 3.9 percent to C$188.15.

Potash Corp said a strike at three of its mines could affect shipments to industrial customers, which make up about 5 percent of the company’s sales. See: [ID:nN19281966].

The small utilities sector was the only other group on the upside, gaining 0.5 percent.

The banking sector lost 2.3 percent, while CIBC fell 3.3 percent to C$58.29, and Toronto-Dominion Bank (TD.TO) was down 3 percent at C$60.05.

Also on the downside, BFI Canada Income Fund BFC_u.TO sank 17.4 percent to C$18.31 after it said it planned to convert from a trust to a dividend-paying corporation. BFI, a waste management company, said it will reduce monthly payments to investors by 73 percent. See: [ID:nN19283848]. ($1=$1.06 Canadian) (Reporting by Leah Schnurr; editing by Rob Wilson)

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