September 3, 2008 / 12:57 PM / 9 years ago

Toronto stocks take another big hit from resources

4 Min Read

TORONTO (Reuters) - The Toronto Stock Exchange's main index slumped for a second day in a row on Wednesday, as concerns about falling demand for commodities dragged down resource issues.

Gains in the financial sector -- the only group to end higher -- pulled the index back from session lows as investors moved money out of commodity-related companies and into banks. Among the gainers, Bank of Montreal (BMO.TO) rose 2.7 percent to C$47.35.

The index fell more than 1 percent, adding to a 3 percent slide on Tuesday, as the materials and energy sectors fell along with oil and gold prices, amid worries over softening demand and a strengthening U.S. dollar.

In the oil patch, Canadian Natural Resources (CNQ.TO) was down 3.3 percent at C$81.98, while among gold producers, Barrick Gold (ABX.TO) fell 5.4 percent to C$33.12.

"I think, overall, people are beginning to re-evaluate global growth, and worry about the implication for the prices of these commodities that have been so high," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

"What we're seeing today is a bit of a shift to more concern that, however long global growth slows, it's going to be longer than what people were thinking a bit earlier in the summer," Warne added.

The S&P/TSX composite index .GSPTSE closed down 161.82 points, or 1.22 percent, at 13,137.72 with all but one of its 10 main sectors in negative territory. It had earlier hit a low of 12,959.86.

The materials sector led declines, giving up 3.9 percent as it was hit by losses in the gold producers subindex. Fertilizer company Potash Corp of Saskatchewan (POT.TO) also dragged, falling 4.7 percent to C$164.53.

The oil and gas group was down 2.3 percent as crude dropped below $109 a barrel on worries of slowing demand, while the U.S. oil sector looked likely to recover quickly from Hurricane Gustav. On Bay Street, Suncor Energy (SU.TO) slipped 2.5 percent to C$53.54.

The banking group, which has been battered by worries about further losses and fallout from the U.S. credit crisis, gained 1.5 percent, as results from the major banks last week encouraged investors.

"I think investors are finally coming to the realization that Canadian financials are not in as dire straits as U.S. financials," said Michael Sprung, president at Sprung & Co. Investment Counsel.

"So they do probably represent a relative safe haven and, in the meantime, dividend yields are pretty generous."

Royal Bank of Canada (RY.TO) gained 2 percent to C$49.64, while Bank of Nova Scotia (BNS.TO) added 1.2 percent to C$48.44.

Shares of sporting goods retailer Forzani Group FGL.TO fell 2.7 percent to C$13.14 after it reported a steep drop in quarterly profit as it was stung by unseasonably cool and wet summer weather, a difficult economy and store renovations.

Market volume was 436 million shares worth C$7.9 billion. Decliners outpaced advancers 1,029 to 495. The blue chip S&P/TSX 60 index .TSE60 closed down 9.25 points, or 1.17 percent, at 783.66.

South of the border, the Nasdaq composite index .IXIC slid on worries that a global economic slump could hit tech spending worldwide, while the Dow Jones industrial average .DJI managed a modest gain, helped by comments from the CEO of Home Depot (HD.N) that the housing market's slump may be nearing an end.

The Nasdaq closed down 15.51 points, or 0.66 percent, at 2,333.73, while the Dow inched up 15.96 points, or 0.14 percent, at 11,532.88.

$1=$1.06 Canadian

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