September 3, 2008 / 12:57 PM / 10 years ago

Toronto stocks to open soft, resources, rate eyed

*Oil slips as slowing demand in U.S. weighs

*Gold and base metals mixed amid bargain-hunting

*Forzani may be in spotlight after results

TORONTO, Sept 3 (Reuters) - The Toronto Stock Exchange’s main index is set for a soft open on Wednesday on a mixed picture in commodities. Markets will watch the Bank of Canada’s interest rate decision for clues on the health of the economy.

The key energy sector, which slumped 6.5 percent on Tuesday as oil tumbled, is expected to drag on the market as oil extended its losses. Materials, which sank 5.9 percent on Tuesday, could also weigh on the market.

Together, the two sectors account for about half of the benchmark index’s total weight and typically drive market direction.

“We’re going to open on the weak side,” said Joe Ismail, technical analyst at Maison Placements Canada. “By the end of the day, probably, you’ll see some bargain-hunting stepping in picking at some of the favorites.”

After Tuesday’s tumble, there are “excellent” buying opportunities, added Ismail.

The S&P/TSX composite index .GSPTSE begins the day at 13,299.54, down 471.71 points, or 3.43 percent. It was the biggest one-day percentage loss since January when Bay Street was pummeled by fears over the U.S. economic outlook.

Oil fell to below $109 a barrel on Wednesday, pulled down in part by slowing demand in the United States and other consumer nations.

Second-quarter profit at Forzani Group Ltd FGL.TO fell as consumers spent less due to a sluggish Canadian economy, the country’s biggest sporting goods retailer said on Wednesday. For details, see [ID:nN03494064]

In New York, stock futures pointed lower on oil’s fall and on financial news concerning the demise of a hedge fund partly owned by Lehman Brothers LEH.N, which reignited concerns about the U.S. financial sector. [ID:nN02450789]

The Bank of Canada is set to announce its key overnight rate at 9 a.m., which most Canadian primary securities dealers expect to remain unchanged at 3 percent.

However, the next move the bank does make may be a cut and the timing of that move could be suggested in the statement. ($1=$1.07 Canadian) (Reporting by Jennifer Kwan; editing by Janet Guttsman)

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