CANADA STOCKS-Tug-of-war keeps TSX gains in check

Tue Jan 27, 2009 11:06am EST
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* Weak commodity prices keep lid on TSX gains

* Eight of index's 10 main groups rise

* Federal budget due after markets close

TORONTO, Jan 27 (Reuters) - Toronto's main stock index rose on Tuesday in a game of tug-of-war between the heavily weighted resource groups and the rest of the market.

The resource sectors, which account for about 40 percent of the index's weighting, were under pressure from underlying commodity prices as the price of oil fell towards $43 a barrel ahead of U.S. inventory data and gold held below $900 an ounce as investors took profits after the last session's gains.

The energy group fell 1 percent and materials dropped 0.72 percent.

"Commodities are weaker on continued concern that we're no where near the bottom of the economic trough, and we're a commodity-biased equity market. We trade with commodities," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.

But financials, which make up a third of the index's weighting, were firmer and led advances in the index's seven other groups, which kept the TSX afloat.

Among the key decliners on Tuesday were Canadian Natural Resources (CNQ.TO: Quote), down 2.2 percent at C$44.29, and EnCana (ECA.TO: Quote), which slid 0.9 percent to C$54.60.   Continued...