Toronto stocks retreat as financials sag

Mon Jul 28, 2008 5:17pm EDT
 
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By Leah Schnurr

TORONTO (Reuters) - The Toronto Stock Exchange's main index ended lower on Monday after a late-day retreat as nagging concerns about more fallout from the credit crunch pulled down Bank of Nova Scotia (BNS.TO: Quote) and other financials.

The drop may have proven deeper if not for energy and gold shares, which rose as prices for their underlying commodities climbed, in part because of a weaker U.S. dollar. In the oil patch, Canadian Natural Resources (CNQ.TO: Quote) rose 1.3 percent, while among the miners, Goldcorp (G.TO: Quote) added 2.4 percent.

After climbing by more than 1 percent in the morning, the index reversed course, yanked down by banking stocks tracking losses in their U.S. counterparts.

Fresh worries of more credit losses stung the sector after U.S. regulators on Friday took over two small banks that had failed. In Toronto, Bank of Nova Scotia gave up 2.3 percent.

"There's no doubt in my mind there will be more losses and more surprises," said Michael Sprung, president at Sprung & Co. Investment Counsel.

But Sprung added, "In Canada, we're going to be in much better shape than south of the border, and I think, if anything, the Canadian financial institutions are overly reacting to the problems now."

The S&P/TSX composite index .GSPTSE closed down 74.85 points, or 0.56 percent, at 13,303.96 with six of its 10 main sectors pushing lower.

The financials sagged 2.2 percent, with Royal Bank of Canada (RY.TO: Quote) down C$1.20, or 2.7 percent, at C$43.72, and Scotiabank losing C$1.14 to C$47.82.   Continued...