CANADA STOCKS-TSX drops sharply, energy leads fall

Thu Jan 22, 2009 10:09am EST
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* Lower oil prices play key role in Toronto index slide

* Weak economic data weighs on investor sentiment

* Drop follows Wednesday's 3 percent gain (Adds details)

By Frank Pingue

TORONTO, Jan 22 (Reuters) - Toronto's main stock index was sharply lower on Thursday morning as weaker oil prices weighed on the resource-heavy index while the latest batch of economic data showed further signs of a deteriorating Canadian economy.

The energy sector led the broad decline as the price of oil, a key Canadian export, turned lower and hit the shares of Canadian oil companies.

Also, data showed retail sales suffered their steepest drop in nearly 11 years in November, another in a long line of economic reports documenting the economy's downward spiral.

Among the key stocks falling were EnCana Corp (ECA.TO: Quote), Canada's biggest energy company, which was down 3 percent at C$53.55, and insurer Manulife Financial (MFC.TO: Quote), which fell 6.5 percent to to C$20.23.

"We had a runup yesterday in the market and we are just reversing that because the reality is there is still a lot of bad news to come out," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.   Continued...