(Refiles to drop extraneous word ‘percent’ from first paragraph)
* TSX tumbles more than 2 percent by midday
* Energy stocks fall along with oil prices
* Financials buck trend with modest gain (Updates to early afternoon)
TORONTO, Sept 2 (Reuters) - The Toronto Stock Exchange’s main index plunged more than 300 points on Tuesday, dragged lower by retreating resource issues as oil prices fell after Hurricane Gustav appeared to have spared major U.S. oil facilities in the Gulf of Mexico.
Oil companies led the way down, following a more than $5 drop in oil prices to $109.53. Initial reports from U.S. refiners showed limited damage from Gustav and anxiety eased as it was downgraded to a tropical storm. Canadian Natural Resources (CNQ.TO) fell 6.8 percent to C$84.45.
The materials sector also dragged the index lower as gold and other metals took their cue from falling oil prices and a stronger U.S. dollar. Agnico-Eagle Mines (AEM.TO) was down 7.3 percent at C$56.49.
“I think there was some pretty good speculation the hurricane would have some positive influence in terms of stock prices and obviously we’re not seeing that, so I think you’re seeing people run for the fences,” said Brian Pow, vice-president, research and equity analyst, at Acumen Capital Partners in Calgary.
“The world economic outlook is not as strong as people would like and that weighs on demand as well,” Pow added.
The S&P/TSX composite index .GSPTSE was down 316.30 points, or 2.3 percent, at 13,454.95 with seven of its 10 main sectors in negative territory.
The energy and materials groups provided the lion’s share of the losses, tumbling 5.9 percent and 5.3 percent, respectively.
On the upside, the consumer discretionary group climbed 1.4 percent, boosted by the sharp drop in oil prices. The sector has been bruised by worries of dampening appetite for spending as consumers grapple with high energy costs.
Among consumer stocks, coffee and doughnut chain Tim Hortons THI.TO rose 2.3 percent to C$34.32.
Shares of convenience store chain Alimentation Couche-Tard (ATDb.TO) were up 3.1 percent at C$13.40 ahead of expected first quarter results.
The large financial group gained 0.7 percent following quarterly results from the major banks last week that were not as bad as some people had feared.
“Overall, people think financials are not a bad place to hide at the moment,” said Pow.