September 2, 2008 / 12:51 PM / 10 years ago

TSX battered by weak resource issues

TORONTO (Reuters) - The Toronto Stock Exchange’s main index was hammered by a selloff in resources on Tuesday, plunging more than 3 percent as commodity prices fell, marking its worst day in more than seven months.

A Toronto Stock Exchange (TSX) logo is seen in Toronto in this November 9, 2007 file photo. REUTERS/Mark Blinch

The heavyweight energy sector led the slide as oil prices slid on fading concerns over the impact from Hurricane Gustav on the U.S. oil industry.

Oil settled down $5.75 at $109.71 a barrel as reports suggested oil installations in the Gulf of Mexico had weathered the storm with only minor damage. Suncor Energy fell 9.6 percent to C$54.91.

The resource-laden materials sector also yanked the Toronto index lower, as it was hurt by falling prices of gold and other metals, which followed oil’s example. Inmet Mining slid 7 percent to C$59.50.

“Gustav was supposed to be a stronger impersonation of Katrina, and it got gradually downgraded, and apparently expected damage is fairly minimal, so obviously that’s hurting the energy sector,” said Levente Mady, a broker at MF Global Canada in Vancouver.

The S&P/TSX composite index closed down 471.51 points, or 3.42 percent, at 13,299.74 with all 10 of its main sectors ending lower. It was the biggest one-day percentage loss since January when Bay Street was knocked down by fears over the prospects for the U.S. economy.

The energy and materials sectors, which account for more than half of the index, shed 6.5 percent and 5.9 percent, respectively.

Other laggards included Potash Corp of Saskatchewan, which fell 6.5 percent to C$172.70, while Canadian Natural Resources slumped 6.5 percent to C$84.73.

Analysts said that with the threat of Gustav passed, worries had turned to concerns of falling demand in the face of a weak global economic outlook.

“The fact that commodities are weakening off with everything else is just another sign that the economy, not only in North America but worldwide, is weakening,” said Mady.

The tech sector also crumpled under pressure from worries over lower corporate spending, following comments last week from bellwether computer firm Dell.

BlackBerry maker Research In Motion fell 2.4 percent to C$126.31, while the sector overall gave up 3.4 percent.

In the first trading day of September, the plunge by the TSX more than wiped out the gains the index made for the month of August.

Just 26 companies on the index were able to avoid the battering to end in positive territory. Some consumer stocks climbed on relief from the drop in oil prices, which eased worries about consumer spending in the face of high energy prices.

Hardware store chain Rona rose 4.4 percent to C$14.09, while Gildan Activewear added 3 percent to


Convenience store operator Alimentation Couche-Tard was up 5 percent at C$13.65 after it reported a drop in profit but said revenue rose. See:.

Market volume was 337 million shares worth C$6.8 billion. Decliners easily outpaced advancers 1,070 to 449. The blue chip S&P/TSX 60 index closed down 28.78 points, or 3.5 percent, at 792.91.

In New York, stocks were also taken lower by falling energy and tech shares. The Dow Jones industrial average closed down 26.63 points, or 0.23 percent, at 11,516.92, while the Nasdaq composite index fell 18.28 points, or 0.77 percent, to 2,349.24.

($1=$1.07 Canadian)

Editing by Rob Wilson

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