CANADA STOCKS-TSX drops with oil price, Citigroup move

Fri Feb 27, 2009 11:00am EST
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* Oils and financials lead TSX lower

* Citigroup weighs; U.S. to take common equity stake

* Bearish economic data adds to negative tone (Adds details)

TORONTO, Feb 27 (Reuters) - Toronto's main stock index was more than 1 percent lower on Friday morning -- following a three-session rally -- as the price of oil fell and U.S. banking news pressured financial shares.

Among the biggest contributors to the index's fall were insurer Manulife Financial MFC.TO, down 6.7 percent at C$13.23, while Royal Bank of Canada RY.TO lost 2.7 percent to C$31.04. Oil company EnCana ECA.TO fell 1.9 percent to C$47.96, while Canadian Natural Resources CNQ.TO dropped 3.4 percent to C$40.26.

The index's financials group dropped 2.6 percent on renewed nationalization fears after the U.S. Treasury Department said it will convert some of the preferred stock it holds in embattled lender Citigroup into common stock, a step that will give it a significant stake in the bank. [ID:nLR896909]

The financials group had bounced higher earlier this week on better-than-expected quarterly results at big Canadian banks.

"(The index is) reversing some of the positives over the last couple of days. The market didn't seem to like (the news on Citigroup) and brought down the shares of financials," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

The price of oil slipped below $43 a barrel pulling the index's big energy group down by about 1 percent after three days of gains.   Continued...