August 1, 2008 / 9:09 PM / 11 years ago

UPDATE 4-Toronto stocks slide as materials drag

(Adds details, quotes)

* TSX falls as resource shares follow metal prices down

* Nortel slides on warning of tough U.S. market

* Economic woes weigh after U.S. jobless data

By Leah Schnurr

TORONTO, Aug 1 (Reuters) - The Toronto Stock Exchange’s main index sagged nearly 100 points on Friday, dragged lower as resource shares were stung by falling metal prices amid worries over dampening demand.

Prices for copper and other metals fell following weak U.S. jobs data that fueled worries over the health of the economy, sending the resource-laden materials sector down. Among the laggards, Inmet Mining IMN.TO was off 4.4 percent.

Economic data out of the United States set the tone early as the unemployment rate hit its highest level in four years in July, while employers cut jobs for a seventh straight month.

The number of jobs cut was less than expected, which provided some initial relief, but the tone turned negative as investors fretted over the gloomy economic picture.

“Employment is typically a lagging indicator, so it will likely continue to deteriorate for a while, and I think the current numbers pretty much reflect that,” said Bob Gorman, chief portfolio strategist at TD Waterhouse.

“The rate of unemployment is likely to edge somewhat higher here and that has an effect on market sentiment, no question.”

The S&P/TSX composite index .GSPTSE closed down 96.38 points, or 0.71 percent, at 13,496.53 with six of its 10 main sectors in the negative.

The materials sector was down 2.2 percent, with Teck Cominco TCKb.TO off C$2.03, or 4.3 percent, at C$45.00, and Inmet down C$2.85 at C$62.08.

Nortel Networks NT.TO gave up C$1.19, or 15.2 percent, to close at C$6.66 after the company said its quarterly loss tripled and warned that a tough U.S. market is hampering wireless spending by telecom firms.

Nortel helped drag the tech sector down 4.4 percent, while BlackBerry-maker Research In Motion RIM.TO slipped C$2.32, or 1.8 percent, to C$123.52.

The TSX index was up 0.9 percent for the week, helped by a more than 300-point gain on Wednesday, which saw energy shares climb along with oil prices, while mining issues rose in the wake of Teck Cominco’s takeover bid for Fording Canadian Coal Trust FDG_u.TO.

On the upside on Friday, the energy sector held on to a 0.9 percent gain as oil prices rose after Israel cautioned that Iran was on the verge of a breakthrough in its nuclear program, raising worries of a possible confrontation.

Canadian Natural Resources (CNQ.TO) was up C$1.27, or 1.6 percent, at C$81.28, and Petro-Canada PCA.TO gained C$1.16, or 2.5 percent, to C$48.42.

Market volume was 306 million shares worth C$6.3 billion. Decliners outpaced advancers 773 to 637. The blue chip S&P/TSX 60 index .TSE60 closed down 6.59 points, or 0.81 percent, at 805.14. The TSX is closed on Monday for the Ontario civic holiday.

In New York, stocks slipped following a hefty quarterly loss from General Motors (GM.N), while the rise in oil prices added to fears over the economy.

The Dow Jones industrial average .DJI closed down 51.70 points, or 0.45 percent, at 11,326.32, and the Nasdaq composite index .IXIC was off 14.59 points, or 0.63 percent, at 2,310.96. ($1=$1.03 Canadian) (Editing by Rob Wilson)

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