March 20, 2009 / 9:08 PM / 8 years ago

CANADA STOCKS-TSX's 8-day rally runs out of gas as oil drops

3 Min Read

* TSX falls 184.14 points to 8,506.35

* Energy and financials lead TSX down

* First lower close since March 9 (Adds details, comments and official numbers)

By Frank Pingue

TORONTO, March 20 (Reuters) - Toronto's main stock index sputtered on Friday, closing lower for the first time in almost two weeks, as a fall in oil prices rattled energy shares, while financials cooled further after a big surge.

Energy shares fell alongside a drop in the price of oil, a key Canadian export, and helped pull the rug from under the TSX after it gained about 15 percent during its recent rally.

Shares of Suncor Energy (SU.TO), the key drag on the index, dropped 7.5 percent to close at C$30.90, while Talisman Energy TLM.TO shares fell 6.8 percent to C$13.00.

"Oil is down and we're also seeing a lot of profit-taking coming in," said Michael Sprung, president of Sprung & Co. Investment Counsel. "But after so many higher sessions I think something like this was expected."

Financial shares, which had a staggering 29 percent rally over seven sessions heading into Thursday, continued to shed value in the latest session after a brokerage said American Express (AXP.N) may post yearly losses and cut its dividend.

Shares of insurer Manulife Financial (MFC.TO) fell 4.7 percent to C$14.04, while rival Sun Life Financial (SLF.TO) fell 7.5 percent to C$20.75.

The S&P/TSX composite index .GSPTSE ended down 184.14 points, or 2.12 percent, at 8,506.35, ending a string of eight consecutive higher closes.

For the week, the TSX rose 2.4 percent.

Nine of the TSX's 10 sectors ended lower, led by a skid of 4 percent by the energy group. The financials index, home to Canadian banks and insurers, dropped 1.87 percent.

The lower close did not garner much concern from investors given the size of the rally that preceded it, but it was still enough to rekindle talk about the potential for the index to return to the five-year low it hit earlier in March.

"We may test the bottoms again over the coming months," said Sprung. "There is certainly more bad data to come, more unemployment and a lot of the markets are going to be focusing on what's being done to sort out the problems in the automotive and manufacturing industries."

$1=$1.24 Canadian Editing by Peter Galloway

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