June 3, 2008 / 7:11 PM / 11 years ago

UPDATE 2-Toronto stocks skid as resources retreat

(Updates to mid-afternoon)

* Index extends fall into negative territory

* Resource shares retreat as commodities weaken

TORONTO, June 3 (Reuters) - The Toronto Stock Exchange’s main index retreated sharply on Tuesday, sliding away from an earlier gain of more than 100 points, as resource issues sagged along with commodity prices.

The oil and gas sector, which had rallied earlier in the day despite a decline in the price of oil, stumbled 1.3 percent as it was caught up in the underlying commodity’s retreat.

Canadian Oil Sands Trust COS_u.TO was down C$1.61, or 3.2 percent, at C$49.54, and Suncor Energy (SU.TO) gave up C$1.80, or 2.6 percent, at C$66.98.

The price of crude fell more than $3 after the U.S. dollar got a boost from comments by U.S. Federal Reserve Chairman Ben Bernanke on the inflationary risk posed by a weak greenback.

“The comments from Bernanke this morning have deflated some of the speculation in oil and gold,” said Rick Hutcheon, president and chief operating officer at RKH Investments. “If they can talk up the value of the U.S. dollar, then the price of oil will go down.”

The S&P/TSX composite index .GSPTSE was down 104.40 points, or 0.7 percent, at 14,709.78 with all but two of its 10 main sectors lower. In volatile action, the benchmark swung in a range of more than 200 points.

Miners and gold producers fell along with the price of bullion, with Agnico-Eagle Mines (AEM.TO) down C$1.53, or 2.2 percent, at C$69.42 and Goldcorp (G.TO) off 74 Canadian cents, or 1.8 percent, at C$39.99.

The broader materials sector edged down 0.2 percent, while it saw some support from Potash Corp of Saskatchewan. The fertilizer company rose C$6.06, or 3 percent, to C$209.43.

Shares of Lululemon Athletica LLL.TO fell C$2.04, or 6.3 percent, to C$30.60 after the clothier trimmed its profit forecast for the year late on Monday.

On the upside, Biovail Corp BVF.TO added 13 Canadian cents, or 1.1 percent, to C$11.80 after it urged shareholders to reject a dissident proxy circular from Eugene Melnyk, the drugmaker’s biggest shareholder and its founder. ($1=$1.01 Canadian) (Reporting by Leah Schnurr; editing by Rob Wilson)

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