December 27, 2007 / 2:18 PM / in 10 years

Financials drag Toronto stocks lower

<p>A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch</p>

TORONTO (Reuters) - The benchmark index of the Toronto Stock Exchange finished lower on Thursday as stronger oil and gold prices in wake of the assassination of Pakistani opposition leader Benazir Bhutto failed to offset sagging financial shares.

The S&P/TSX composite index fell 19.27 points, or 0.14 percent, to close at 13,675.57.

While oil and gold both moved higher because of the geopolitical instability resulting from Bhutto’s death, persistent worries about the credit crisis and the U.S. economy continued to drag on financials.

“Financials are being given a bit of a haircut,” said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver. “I don’t think we’re done here, either.”

Of the 10 main groups of the Toronto index, four finished higher. Two of those were the heavyweight energy and materials groups, which added 0.32 percent and 1.35 percent, respectively.

However, financials make up the third key pillar of the Toronto market, and they paced 1.01 percent lower.

Toronto-Dominion Bank shed C$1.19, or 1.7 percent, to C$68.72. Bank of Montreal gave up 44 Canadian cents to C$55.86. Manulife Financial Corp fell 69 Canadian cents to C$39.81.

U.S. February crude rose 65 cents to settle at $96.62 on news of Bhutto’s death, as well as on falling U.S. crude stocks. Gold rose $2.20 to $826.80 an ounce after hitting a one-month high of $830.05 earlier in the session.

Gold is generally seen as a safe-haven investment, while oil prices tend to benefit from geopolitical instability that could pose a risk to supplies of crude.

The stronger commodities helped some Toronto-listed miners and oil producers. Royal Gold gained 94 Canadian cents, or 3.2 percent, to C$30.09. Imperial Oil rose 34 Canadian cents to C$54.89.

Bhutto’s death could pose a threat to regional stability and to Pakistan’s move toward a stable democracy, observers said.

“There’s some suggestion that elections could be put off,” Paul Taylor, chief investment officer at BMO Harris Investment Management, said of the situation. “Certainly, versus yesterday, the risk level has increased.”

South of the border, the day became a full-blown selloff, with the Dow Jones industrial average sliding 192.08 points, or 1.4 percent, to 13,359.61. The tech-heavy Nasdaq fell 47.62 points, or 1.75 percent, to 2,676.79.

($1=$0.98 Canadian)

Reporting by Wojtek Dabrowski; editing by Rob Wilson

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