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TORONTO, April 22 (Reuters) - Toronto's main stock market index fell on Tuesday morning as disappointing results from a string of Canadian blue chip companies and cautious words from the Bank of Canada offset firm commodity prices.
The Bank of Canada commentary came as it cut its key interest rate by 50 basis points to 3 percent. The cut had been widely expected.
In an accompanying statement, the central bank projected a steeper U.S. economic downturn that would dampen Canadian growth, and forecast additional rate cuts. However, it dropped a previous reference to having to lower rates in the "near term".
"We have just been hit by a number of factors all at once that are causing investors to take a bit of a pause," said Michael Sprung, president at Sprung and Co Investment Counsel.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 54.38 points, or 0.4 percent, at 14,266.78.
Seven of the TSX index's 10 main groups were lower, led by a 1.3 percent drop in industrial shares and a 0.7 percent drop in financial shares.
The country's top railway companies led the decliners after they both reported disappointing results. Canadian National Railway (CNR.TO) was down C$1.34 at C$50.96, while rival Canadian Pacific (CP.TO) was off C$2.80 at C$68.45.
Canadian Pacific reported a 29 percent drop in its first quarter profit on Tuesday and reduced its earnings guidance for this year, citing rising fuel costs and a stronger Canadian dollar.
One day earlier, rival Canadian National posted a 4 percent drop in first-quarter net profit, blaming tough winter weather that slowed train operations.
Canada's top banks declined as investors digested the central bank's commentary.
Canadian Imperial Bank of Commerce (CM.TO) was down 49 Canadian cents at C$69.23, and Toronto-Dominion Bank was off 70 Canadian cents at C$64.50.
But firm commodity prices helped boost resources shares, with fertilizer producers leading the way. Agrium Inc (AGU.TO) added 30 Canadian cents to C$93.00, while Potash Corp (POT.TO), the index's biggest stock, was up 33 Canadian cents at C$211.43.
$1=$1.01 Canadian Reporting by Scott Anderson; Editing by Peter Galloway