March 6, 2008 / 6:59 PM / 11 years ago

UPDATE 2-Toronto stocks battered by credit woes, resources

(Updates stock movement, adds details, quotes)

By Leah Schnurr

TORONTO, March 6 (Reuters) - The Toronto Stock Exchange’s main index slid further on Thursday afternoon, dropping 200 points on worries over problems in the credit market and retreating commodity prices.

Weak U.S. data also pressured the benchmark, stoking concern over the state of the economy south of the border. Home foreclosures hit a record in the fourth quarter, while a report from the Labor Department said the number of people staying on jobless benefits is steady at the highest level in nearly 2-1/2 years.

The numbers helped worsen the sour mood in the market’s financial sector, which fell 2.5 percent, with Canadian Imperial Bank of Commerce down C$1.83, or 2.8 percent, at C$62.52. Bank of Montreal (BMO.TO) skidded C$2.27, or 5 percent, to C$42.75, extending its recent decline.

The financial sector has fallen more than 8 percent over the past six days as banks have been beaten down by disappointing quarterly results, the ongoing asset-backed commercial paper problem and persistent fears of more writedowns.

“Even though the Canadians are arguably somewhat cleaner than the (U.S. financials), everyone’s wondering how clean they are,” said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary, Alberta. “It’s still that ongoing fear and I think as long as that’s going on, the financials are going to be under pressure.”

The S&P/TSX composite index .GSPTSE was down 200.66 points, or 1.48 percent, at 13,402.66 with all but one of its 10 main sectors in negative territory.

Resource shares also tumbled, hurt by profit-taking after Wednesday’s gains, as well as a retreat in commodity prices from earlier highs.

The energy sector was off 0.8 percent, with Canadian Natural Resources (CNQ.TO) losing C$1.20, or 1.6 percent, to C$75.25, and Canadian Oil Sands Trust COS_u.TO shedding C$1.44, or 3.2 percent, to C$44.04.

The materials group, which houses resource shares, fell 1.5 percent, and its subindex of gold producers was down 1.5 percent. Barrick Gold (ABX.TO) moved down C$1.63, or 3.1 percent, to C$50.52, and Inmet Mining IMN.TO stumbled C$2.63, or 3 percent, to C$85.45.

“I think you’re getting a lot of market nervousness, so (the commodities) had a good run yesterday, so I think it’s a fair statement that there’s probably a fair bit of profit-taking in those today,” Kerkovius said.

The small telecoms group was the only sector remaining positive, up 0.2 percent, with Telus Corp (T.TO) adding 85 Canadian cents, or 1.9 percent, to C$45.20.

Also on the upside, Sherritt International (S.TO) rose 61 Canadian cents, or 4 percent, to C$15.94 after the mining and energy company reported a 6 percent increase in fourth-quarter profit as climbing commodity prices offset the effect of a rising Canadian dollar.

Eldorado Gold (ELD.TO) bucked the downward momentum among gold miners as it gained 62 Canadian cents, or 9.3 percent, to C$7.27 after it said production has resumed at its Kisladag mine in Turkey.

$1=$0.99 Canadian Reporting by Leah Schnurr; Editing by Peter Galloway

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