April 29, 2008 / 9:14 PM / 9 years ago

UPDATE 4-Tumbling resources chop 260 pts off Toronto stocks

(Adds details, quotes)

By Leah Schnurr

TORONTO, April 29 (Reuters) - Retreating commodities helped knock 260 points off the Toronto Stock Exchange’s main index on Tuesday, as it was dragged lower by sinking resource shares.

A selloff in oil and gold, key underlying commodities for the resource-laden Toronto benchmark, sent the materials and energy sectors tumbling 4.8 percent and 2.9 percent respectively.

In the oil patch, Suncor Energy (SU.TO) was down C$3.76, or 3.3 percent, at C$111.74, while in the gold producers space, Agnico-Eagle Mines (AEM.TO) slid C$2.59, or 4.2 percent, to C$59.22.

“Today is a reminder that commodities can impact the TSX to the downside as well as the upside,” said Elvis Picardo, investment strategist at Northern Securities Inc in Vancouver.

“So far this year, they’ve really been propping the index up nicely, while the U.S. indexes have been sliding all along, but today it’s the reverse.”

A firmer U.S. dollar and easing supply worries carved $3.12 off the price of oil, sending it down to $115.63 a barrel the day after it touched a new high near $120.

Gold was also pulled lower by a rise in the U.S. dollar, falling as low as $868.80 an ounce. On Bay Street, the gold producers subindex slumped 4.5 percent.

The S&P/TSX composite index .GSPTSE closed down 260.25 points, or 1.85 percent, at 13,825.60 with all but two of its 10 main sectors pointing south.

Gildan Activewear (GIL.TO) was among the biggest decliners on the index after the T-shirt maker cut its full year and second-quarter earnings per share guidance. Gildan plummeted C$11.08, or 30.6 percent, to C$25.18.

Potash Corp of Saskatchewan (POT.TO) also helped pull the index deeper under water, as the fertilizer company skidded C$12.33, or 6.3 percent, to C$183.27. Its stock had seen a recent steep runup on soaring demand and prices for potash.

“I would say there seem to be a lot of people that have been trying to make their numbers this year by going on pure momentum plays,” said Andrew Martyn, portfolio manager at Davis-Rea, about commodities in general.

“And if they catch the momentum play late, and it doesn’t work, they seem to run away from that and try to find something else that’s working -- which is not much out there, actually.”

On the upside, Rogers Communications (RCIb.TO) climbed C$1.56, or 3.6 percent, to C$44.46 after it said its first-quarter profit more than doubled and it announced a deal with Apple (AAPL.O) to launch the iPhone in Canada this year.

Rogers’ advance helped propel the telecoms sector up 0.8 percent. The only other sector in positive territory was the tech group, which rose 1.8 percent.

Amid a raft of quarterly results, WestJet Airlines (WJA.TO) said its first-quarter profit jumped while the strong domestic economy offset the impact of soaring fuel costs. Shares in Canada’s second-largest air carrier were up 44 Canadian cents, or 2.6 percent, at C$17.12.

The day’s decline was the biggest one-day drop for the TSX in over a month. The benchmark has seen a strong rally throughout April, boosted by commodity prices and hopes that the worst of the credit crunch has been left behind. With one day to go, the index is up more than 3 percent for the month.

“The first quarter of the year was a total washout but, overall, markets in North America have come back really strongly so far this month,” said Picardo. “So a pullback like this in the overall scheme of things is totally to be expected.”

Market volume was 398 million shares worth C$7 billion. Decliners outpaced advancers 1,057 to 496. The blue chip S&P/TSX 60 index .TSE60 closed down 16.61 points, or 1.99 percent, at 817.84.

In New York, stocks were little changed as losses in the pharmaceutical sector offset relief over retreating oil prices. The Dow Jones industrial average .DJI was down 39.81 points, or 0.31 percent, at 12,831.94. The tech-heavy Nasdaq composite index .IXIC inched up 1.70 points, or 0.07 percent, to 2,426.10. ($1=$1.01 Canadian) (Editing by Rob Wilson)

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