UPDATE 2-Toronto stocks weighed by economic fears, CP Rail

Tue Apr 22, 2008 4:38pm EDT
 
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(Updates official closing numbers, adds detail, quotes)

TORONTO, April 22 (Reuters) - The Toronto Stock Exchange's main index closed lower on Tuesday, ending a six-session rally, amid disappointing corporate results and comments from the Bank of Canada that U.S. economic prospects were worse than previously thought.

The central bank cut its key interest rate by a half a percentage point but said its outlook for the United States has worsened since January, underscoring worries over the impact a slowing U.S. economy could have on Canada.

"You get the central bank cutting rates a half point and saying, despite strong domestic conditions, the slowdown in the States is worse than we thought," said Gavin Graham, chief investment officer at Guardian Group of Funds. "It obviously does focus attention."

Canadian Pacific Railway CP.TO also weighed on the benchmark, falling C$3.03, or 4.3 percent, to C$68.22, after it reported a drop in first-quarter profit and lowered its earnings expectations for the year.

The S&P/TSX composite index .GSPTSE closed down 54.82 points, or 0.38 percent, at 14,266.34 with all but two of its 10 main sectors on the downside.

EnCana ECA.TO and Fording Canadian Coal Trust FDG_u.TO both finished lower after posting declines in profit. Fording was down C$2.30, or 3.4 percent, at C$65.21, while EnCana lost 60 Canadian cents, or 0.7 percent, to C$86.08.

On the upside, the energy sector pushed up 0.4 percent, as oil surged to another record high near $120 a barrel, lifted by a weaker U.S. dollar and continuing supply worries.

Canadian Oil Sands Trust COS_u.TO rose C$3.20, or 7.1 percent, to C$48.30, and Suncor Energy SU.TO was up C$1.56, or 1.3 percent, at C$121.07.

($1=$1.01 Canadian) (Reporting by Leah Schnurr; editing by Rob Wilson)