December 3, 2008 / 10:23 PM / 10 years ago

CANADA STOCKS-TSX ends lower as Nexen deal talk dissipates

* Toronto market down 10.5 percent on week so far

* Nexen leads drop as takeover talk wanes

* RIM shares rebound to keep market’s slide in check (Adds details, comments and U.S. market closes)

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 hostile takeover bid for 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 those gains as speculation waned that a takeover offer would be made. The drag on Nexen shares spilled over to the rest of Toronto’s energy group, which was down 1.9 percent.

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.

“It just goes to show you that in this market even a potential acquisition target finds it very difficult to make gains,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

“And the downside risks in cases where that talk turns out to be premature or incorrect is really quite significant.”

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 hit at midafternoon as some investors snapped up stocks at beaten-down prices.

For the second straight session, events in Canada kept the TSX from tagging along with a rise in U.S. stock markets. On Tuesday, news that insurer Manulife Financial (MFC.TO) would issue new stock kept heavily weighted financial stocks pinned down.

Another factor preventing the index from shaking its funk is political uncertainty in Canada as the Conservative government could temporarily suspend Parliament to stop opposition parties from voting it out and taking power.

Helping cushion the slide in Toronto stocks was a rebound in Research In Motion shares, which early in the session fell as much as 4.8 percent to C$44.23 after it cut its outlook. RIM shares bounced back to close 5 percent higher at C$48.90.

A 1.8 percent rise in heavily weighted financial stocks also helped keep the TSX’s slide in check. The rally in bank shares comes ahead of earnings reports from a batch of Canadian banks on Thursday, including Canadian Imperial Bank of Commerce (CM.TO) and Toronto-Dominion Bank (TD.TO).

In the United States, the Dow Jones industrial average .DJI rose 172.60 points, or 2.05 percent, to 8,591.69, while the Nasdaq composite index .IXIC ended up 42.58 points, or 2.94 percent, at 1,492.38.

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

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