UPDATE 1-Toronto stocks yanked lower by resources, banks

Fri Feb 29, 2008 11:11am EST
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(Updates stock movement and adds details, quotes)

TORONTO Feb 29 (Reuters) - The Toronto Stock Exchange's main index was sharply lower on Friday morning, pulled down by declines in resource and banking shares and deepening worries over the health of the U.S. economy.

The oil and gas group retreated 1.9 percent as the price of oil eased back from the inflation-adjusted record high it had reached in the previous session. On Bay Street, Canadian Natural Resources CNQ.TO slid C$1.79, or 2.4 percent, to C$73.41, and Suncor Energy SU.TO fell C$2.30, or 2.2 percent, to C$101.55.

The materials sector, home to natural resource shares, was also caught in the downward momentum. The group was down 2.3 percent as the price of gold fell back from the historic high over $975 an ounce hit earlier in the day. Agnico-Eagle Mines AEM.TO shed C$2.16, or 3.2 percent, to C$66.37, and Teck Cominco TCKb.TO was off C$1.90, or 4.6 percent, at C$39.29.

The financial sector, the largest on the index, was down 1.1 percent, weighed down by Bank of Montreal BMO.TO, which fell amid a report that it has "signaled" it may withdraw from the restructuring of Canada's nonbank asset-backed commercial paper market. BMO was down C$1.32, or 2.5 percent, at C$51.03.

Royal Bank of Canada RY.TO shed 29 Canadian cents, or 0.6 percent, to C$49.83 after Canada's biggest bank reported a drop in profit on writedowns of various U.S. securities, a climbing Canadian dollar, and gains seen in the year-earlier quarter that were not repeated.

The S&P/TSX composite index .GSPTSE was down 222.05 points, or 1.6 percent, at 13,651.84 with all of its 10 main sectors in negative territory.

"The financials, give or take, are about one-third of the TSX, and there keeps being these continual surprises and black-box things coming out," said Andrew Martyn, portfolio manager at Davis-Rea.

"I think overall, the question that arises is that if Canadians are looking at what's going on in the U.S. banking situation and what's going on in Canada, Canada is very different... However, all Canadian banks have a strategy of expanding internationally and the question is how much of their international will become problematic."   Continued...