August 5, 2008 / 8:49 PM / 11 years ago

UPDATE 2-Toronto stocks swept lower as commodity tide ebbs

(Updates closing numbers, adds details)

*TSX falls nearly 2 percent as commodities fall

*Energy and materials sectors lead downside

TORONTO, Aug 5 (Reuters) - The Toronto Stock Exchange’s main index slumped nearly 2 percent on Tuesday, battered by tumbling resource shares that followed commodity prices lower.

Weak prices for oil and gold set the tone early in the day with the index tumbling more than 300 points shortly after the opening bell.

With just three out of 10 main sectors pushing lower, the materials sectors accounted for the bulk of the day’s declines. Potash Corp of Saskatchewan POT.TO was the biggest drag on the benchmark, falling 12.8 percent, while in the oil patch Canadian Natural Resources (CNQ.TO) dropped 7.7 percent.

The price of oil fell to a three-month low as Tropical Storm Edouard hit the Texas coast without causing any major disruptions to U.S. energy operations. Oil settled down at $119.17 a barrel, after falling as low as $118.00 earlier.

The S&P/TSX composite index .GSPTSE closed down 254.33 points, or 1.88 percent, at 13,242.20, after hitting a session low of 13,130.54.

Amid widespread losses in commodities, gold also tumbled as the U.S. dollar firmed and the U.S. Federal Reserve decided to hold interest rates steady.

On Bay Street, the materials and energy sectors shed 8.6 percent and 5 percent, respectively. Inmet Mining IMN.TO lost C$5.25, or 8.5 percent, to C$56.83, while Canadian Natural Resources was down C$6.28 to C$75.00.

Agriculture stocks also lagged, with fertilizer producer Potash Corp falling C$26.49 to C$180.50, and rival Agrium AGU.TO sliding C$6.99, or 7.8 percent, to C$82.78.

The large financial sector benefited from the drop in resource groups as investors opted to put their money in banks instead. Bank of Montreal (BMO.TO) was up C$2.17, or 4.6 percent, at C$49.61, and Royal Bank of Canada (RY.TO) gained C$1.58, or 3.4 percent, to C$48.30, while the sector overall added 2.5 percent.

The only other sector that fell was the utilities sector, which was off 0.4 percent. ($1=$1.04 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)

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