August 29, 2008 / 3:31 PM / in 9 years

Retreating financials lead Toronto stocks lower

* Financial sector slips after big gains this week

* Energy shares reverse course to slip lower

* Trading choppy ahead of Labour Day weekend (Adds details)

TORONTO, Aug 29 (Reuters) - The Toronto Stock Exchange's main index fell on Friday morning, tugged lower by technology and financial issues amid thin trading ahead of the Labour Day long weekend.

The heavily weighted financial sector slipped 0.6 percent after logging big gains this week -- 4.2 percent on Thursday and 2.5 percent on Wednesday -- on the back of quarterly results from some of Canada's Big Six banks.

Toronto-Dominion Bank (TD.TO) fell 0.9 percent to C$62.03, while Bank of Nova Scotia (BNS.TO) slipped 1 percent to C$49.23.

"If you're a short-term trader you're inclined to take some profits," said Bob Gorman, chief portfolio strategist at TD Waterhouse. "That was a pretty major bounce."

At midmorning, the S&P/TSX composite index .GSPTSE was down 73.26 points, or 0.53 percent, at 13,677.22, after rising the two previous sessions. Nine of the 10 main groups were lower.

Activity is expected to be choppy going into the holiday weekend, said Gorman.

"You often see people squaring their positions before going into a long weekend," he said. "I expect trading volume to be light for the course of the day as well."

The key energy sector, which rose at the open, was little changed, easing 0.3 percent despite strength in the price of oil, which climbed as Tropical Storm Gustav was poised to enter the U.S. Gulf.

Oil prices rose on concerns Tropical Storm Gustav would hurt gas and oil installations in the Gulf of Mexico, while the price of bullion firmed and base metals slipped. Materials were down 0.1 percent.

It was a mixed picture in the oil patch, EnCana Corp (ECA.TO) was flat, down 0.05 percent to C$79.13, while Husky Energy (HSE.TO) sank 1.7 percent to C$46.86.

In materials, Potash Corp of Saskatchewan (POT.TO) rose 0.1 percent to C$186.22, while Agrium (AGU.TO) climbed 1 percent to C$88.87.

Technology shares also weighed on the market, falling 1.9 percent with Research in Motion RIM.TO down 3.3 at C$129.00.

In economic news, Canada's economy grew by a weaker than expected 0.3 percent in the second quarter, Statistics Canada said, narrowly avoiding the common definition of a recession as demand for exports waned.

Gross domestic product shrank 0.8 percent in the first quarter. See [ID:nN29445075] ($1=$1.05 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)

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