June 3, 2008 / 9:12 PM / 11 years ago

UPDATE 3-Toronto stocks dragged lower as oils retreat

(Updates with closing numbers, details)

* Index gives up early gains to end 0.6 percent lower

* Energy shares lead retreat as as oil price tumbles

* Lululemon falls after cutting profit forecast

TORONTO, June 3 (Reuters) - The Toronto Stock Exchange’s main index erased early gains to close lower in a roller-coaster session on Tuesday, as energy and gold-mining issues slumped amid a selloff in commodities.

After climbing more than 100 points, the Toronto benchmark turned sharply lower as the energy sector retreated with slumping oil prices.

Crude gave way after comments from U.S. Federal Reserve Chairman Ben Bernanke, warning about the inflationary risk of a weak U.S. dollar, gave a boost to the greenback and knocked oil down $3.45, or 2.7 percent, to $124.31 a barrel.

Suncor Energy (SU.TO) fell C$2.18, or 3.2 percent, to C$66.60, while Canadian Oil Sands Trust COS_u.TO slid C$1.55, or 3 percent, to C$49.60. The sector was down 1.4 percent.

The S&P/TSX composite index .GSPTSE closed down 85.57 points, or 0.58 percent, at 14,728.61 with all but two of its 10 main sectors on the downside. During the course of the day, the benchmark swung more than 100 points both higher and lower.

Shares of gold producers also weighed, while the price of bullion fell in the face of the stronger U.S. dollar. The subindex gave up 1.5 percent, with Goldcorp (G.TO) off 90 Canadian cents, or 2.2 percent, at C$39.83.

But fertilizer company Potash Corp of Saskatchewan POT.TO helped the larger materials sector post a gain of 0.4 percent. Potash rose C$9.93, or 4.9 percent, to C$213.30.

In the retail space, shares of Lululemon Athletica LLL.TO dropped C$2.04, or 6.3 percent, to C$30.60 a day after it trimmed its profit forecast for the rest of the year.

The small healthcare sector was the other group to stay on the upside, helped by Biovail Corp BVF.TO, which rose 12 Canadian cents, or 1 percent, to C$11.79. The drugmaker urged shareholders to dismiss a dissident proxy circular from Eugene Melnyk, the company’s founder and biggest shareholder. The sector rose 0.8 percent.

$1=$1.01 Canadian Reporting by Leah Schnurr; editing by Rob Wilson

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