April 1, 2008 / 2:34 PM / 11 years ago

Toronto stock index begins quarter with a drop

TORONTO, April 1 (Reuters) - Toronto’s main stock market index started the second quarter on a soft note on Tuesday as falling commodity prices weighed down resource issues and took the steam out of a rise in financial shares.

But some saw this shift as a sign that the worst is over for the markets.

“Money is now starting to flow from the commodities side of the market to the financials, which is a big positive for the market as a whole,” said Sal Masionis, a stockbroker at Brant Securities.

Masionis said this could suggest that sentiment has shifted from a reliance on commodities as a safe haven and that investors have regained confidence that the worst of the financial problems amid a global credit crunch is over.

By midmorning, the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 73.43 points, or 0.6 percent, at 13,276.70.

Investors piled into financial shares, which jumped 1.5 percent, despite mixed news in the sector.

Lehman Brothers LEH.N said it would raise as much as $3 billion by issuing convertible preferred stock to bolster its balance sheet.

But a cloud hung over the sector as UBS AG UBSN.VX doubled its writedowns from the subprime crisis, dumped its chairman and asked shareholders for more emergency capital.

Among the country’s biggest banks gaining were Toronto-Dominion Bank (TD.TO) which added C$1.64 to C$64.16 and Canadian Imperial Bank of Commerce (CM.TO), which rose C$1.68 to C$67.78.

But the resource-laden materials group shed 3.4 percent as gold prices dropped to a two-month low below the key $900-an-ounce level amid a stronger U.S. dollar, which tarnished the metal’s appeal.

Barrick Gold (ABX.TO), the world’s biggest producer, dropped C$1.83 to C$43.05 and Agnico-Eagle Mines (AEM.TO) fell C$3.14 to C$66.48.

Meanwhile, energy shares fell 1.6 percent as the price for U.S. crude oil slipped 1.5 percent to $100.06 a barrel on the strengthening U.S. dollar. Suncor Energy (SU.TO) slid C$3.21 to C$96.00 and Canadian Natural Resources (CNQ.TO) dropped C$2.11 to C$68.16.

$1=$1.03 Canadian Reporting by Scott Anderson; Editing by Bernadette Baum

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