UPDATE 1-Toronto stocks drop with commodity prices

Thu Jul 24, 2008 11:48am EDT
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*TSX lower as oils and materials fall

*Banks down on profit-taking

*Aurelian shares soar after takeover news

TORONTO, July 24 (Reuters) - The Toronto Stock Exchange's main index was sharply lower late on Thursday morning, pulled down by resource and financial-services shares despite strong quarterly results from big names Husky Energy (HSE.TO: Quote) and Potash Corp of Saskatchewan (POT.TO: Quote).

Oil and gas stocks dropped as the price of oil slid to around $124 a barrel in choppy trade as concerns over slowing demand continued to weigh.

"The hot button is the price of oil," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

"That's where people are taking their clues from. If the price of oil is viewed as strengthening, people will get back into commodities. If the price of oil weakens they'll sell the commodities and buy the financials and consumer discretionaries."

But financials also were lower on Thursday due to profit-taking following a run-up of about 16 percent in the past week on upbeat U.S. bank results.

Also weighing on the sector was U.S. housing data that showed a steeper-than-expected drop in home sales.   Continued...