May 7, 2008 / 9:14 PM / in 10 years

UPDATE 3-Toronto stocks pulled lower by profit-taking

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By Wojtek Dabrowski

TORONTO, May 7 (Reuters) - The main index of the Toronto Stock Exchange gave up ground on Wednesday as strong oil prices failed to dissuade investors from taking profits.

The S&P/TSX composite index .GSPTSE fell 42.77 points, or 0.3 percent, to close at 14,371.53.

Five of the index’s 10 main subgroups finished higher, including the key energy sector, which eked out a gain of 0.18 percent.

Among decliners, financials eased 0.86 percent and the resource-laden materials group dipped 0.42 percent.

The S&P/TSX 60 index of Canadian blue chips edged down 2.09 points, or 0.24 percent, to finish at 853.03.

As oil charges past the $120 a barrel mark, some investors remain cautious about the U.S. economy and are using the current strength of the markets as an opportunity to reduce exposure to equities, said Adrian Mastracci, portfolio manager at KCM Wealth Management Inc in Vancouver.

“For the most part, we’re doing relatively OK, but investors are a bit more fearful and to take a little bit off the table right now is not a bad idea,” he said. “These sort of times would be good times to sell,” he said.

Notable gainers during the session included Goldcorp G.TO, which added 90 Canadian cents, or 2.5 percent, to finish at C$37.70.

Among energy names, EnCana Corp ECA.TO was up 33 Canadian cents, or 0.4 percent, at C$84.57.

Gavin Graham, chief investment officer at Guardian Group of Funds, said the day’s dip in financials was likely due to Tuesday’s earnings report from insurer Sun Life Financial SLF.TO, which warned it expects the balance of 2008 to be difficult.

Sun Life finished down 55 Canadian cents, or 1.2 percent, at C$46.89.

BCE Inc BCE.TO, Canada’s biggest telecom company, gained 20 Canadian cents to finish at C$36.76 after it reported a drop in quarterly profits because of one-time charges. Importantly, however, its wireless operations continued to add subscribers at a rapid clip, which pleased investors.

BCE also gave no updates on the C$34.8-billion buyout of the company by private equity investors, which is still expected to close by the end of the second quarter.

Graham said he was a little surprised by the overall market decline on Wednesday, given the continued strength in oil prices.

“It may be the fact that people are focusing on the negative effects of that,” he said of high crude. “But it does seem a little bit of a contradiction.”

In the United States, the Dow Jones industrial average .DJI also had a losing day, finishing lower by 206.48 points, or 1.59 percent, at 12,814.35. The tech-heavy Nasdaq dove 44.82 points, or 1.8 percent, to end at 2,438.49.

$1=$1.01 Canadian Reporting by Wojtek Dabrowski; editing by Peter Galloway

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