TORONTO (Reuters) - Toronto’s main stock index finished more than 100 points lower on Tuesday as a slide in oil prices shook out some of the big gains the market recorded in the previous session, when it closed at a six-week high.
A day after the energy group helped power a rally of more than 5 percent, a drop in oil prices helped drag the TSX lower as upcoming data is expected to show an increase in crude stockpiles.
Shares of Suncor Energy, the biggest weight on the index, fell 7.3 percent to C$28.50, while Canadian Natural Resources shed 3.4 percent to C$51.18.
“It’s a natural reaction to the extent of the move that we had yesterday,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver. “And also, crude oil is down and commodity prices are modestly lower so that’s affecting the TSX on the downside as well.”
The energy group led all sectors lower with a 2.7 percent skid, followed by a 2 percent drop by the heavily weighted financials index. Seven of the TSX’s 10 main sectors ended down.
The S&P/TSX composite index fell 109.12 points, or 1.22 percent, to close at 8,849.39 on the heels of a 450 point rally on Monday.
The Toronto Stock Exchange’s main index fell 2 percent moments after the open but managed to rebound somewhat by the close, helped by a turnaround in U.S. stocks after U.S. Federal Reserve Chairman Ben Bernanke moved to reassure private investors participating in Washington’s plan to free banks of toxic assets.
Banks and insurers were among the key drags on the TSX as investors pocketed some of the profits from Monday’s session, when the U.S. bailout plan helped boost global optimism about a revival in the battered financial sector.
Toronto-Dominion Bank shares dropped 3.9 percent to C$43.73, while insurer Manulife Financial dropped 5 percent to C$15.44.
The drop by the TSX did not generate much concern among analysts, with many saying Monday’s rally was a bit exaggerated and they expected the market to give up some gains.
“The most important thing is it was too big a pop yesterday and people are now having second thoughts,” said Sal Masionis, stockbroker at Brant Securities.
Even with the latest drop, the TSX remains 18.3 percent above the five-year lows it saw earlier this month.
With no key Canadian data due for the remainder of the week it is likely that the TSX will take its direction from its bigger U.S. counterparts and from oil and commodity prices.
Editing by Rob Wilson