Toronto stocks knocked down by oil

Mon Jul 7, 2008 5:33pm EDT
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By Leah Schnurr

TORONTO (Reuters) - The Toronto Stock Exchange's main index fell more than 2 percent on Monday, putting it on the cusp of a correction, as it was dragged down by weak resources and gloom over the outlook for economic growth.

Oil and gas companies led the descent, stung by a drop of nearly $4 in crude amid signs of easing tensions with Iran over its nuclear program.

But with the price of oil remaining high -- it is up more than 40 percent this year to above $141 a barrel -- intensifying worries over its impact on consumer spending and the economy took the broader market lower.

"We're more and more digesting the fact that oil is a key ingredient and it's very hard to grow an economy with oil at $140 or thereabouts," said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc in Vancouver.

"It's simply just an uphill battle to do that, so the bears are out today and they're out in full force."

The S&P/TSX composite index closed down 297.59 points, or 2.12 percent, at 13,712.80, with all but one of its 10 sectors pointing lower.

It was the first time the benchmark has closed in negative territory for the year since the end of April.

The Toronto benchmark has fallen 9.5 percent from the record high reached at the beginning of June, putting it close to an official correction, traditionally defined as a 10 percent fall from the peak level.   Continued...

<p>A general view of the TSX (Toronto Stock Exchange) Broadcast Centre in Toronto June 20, 2008. REUTERS/Mark Blinch</p>