December 3, 2008 / 9:38 PM / 10 years ago

CANADA STOCKS-TSX ends lower for 3rd day as Nexen wanes

* Toronto market down 10.5 percent on week so far

* Nexen leads latest drop as takeover talk wanes (Adds details, comments, updates closing numbers)

By Frank Pingue

TORONTO, Dec 3 (Reuters) - The Toronto Stock Exchange’s main index finished lower for a third straight session on Wednesday with energy shares sliding as talk about a possible takeover of Nexen Inc NXY.TO fizzled out.

Nexen, whose shares rallied on Tuesday on talk that it may be acquired by French oil major Total SA (TOTF.PA), handed back all the gains as speculation waned that a deal would go ahead. The drag on Nexen shares spilled over to the rest of Toronto’s energy group.

Shares of Nexen dropped 9.34 percent to C$21.65, while EnCana Corp (ECA.TO) shares fell 1.97 percent to C$52.88.

London-based banking sources said Total had not secured financing for a potential C$19.7 billion bid for Nexen. That contradicted earlier media reports that said the company had the backing of lenders for a deal.

The S&P/TSX composite index .GSPTSE closed down 30.85 points, or 0.37 percent, at 8,296.96 with six of its 10 subindexes finishing lower.

With the lower close, the benchmark index is now down 10.5 percent on the week, with the bulk of the fall occurring on Monday when commodity prices tanked and U.S. economic news was gloomy.

Despite the lower close, the main index still managed to close more than 200 points above the session low it at midafternoon as some investors snapped up stocks at severely beaten-down prices.

“I think people people would like to be trying to find situations where they have some level of faith going forward so they can put some of their money to work,” said Rick Hutcheon, president and chief operating officer at RKH Investments.

“But we’ve had so many false starts, we’ve had so many head fakes in the market that I think people are absolutely gunshy right now.”

$1=$1.25 Canadian Reporting by Frank Pingue; editing by Peter Galloway

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