March 7, 2008 / 6:28 PM / 11 years ago

UPDATE 2-Toronto stocks fall back on new economic jitters

(Updates to afternoon, adds quotes)

TORONTO, March 7 (Reuters) - In a volatile session, the Toronto Stock Exchange’s main index was back in deep negative territory early on Friday afternoon, dragged lower by worries over the U.S. economy, as well as tumbling resource shares.

After recovering from a more than 170-point drop in the morning, the S&P/TSX composite index .GSPTSE was down 80.66 points, or 0.6 percent, at 13,279.78. Of its 10 main groups, half were down.

An unexpected drop in U.S. nonfarm payrolls for February stoked jitters over the health of the economy, which even a big increase in Canadian jobs last month failed to offset.

Statistics Canada said five times more jobs than anticipated were added in February but investors still had their eyes on the health of the economy in the United States, Canada’s biggest trading partner.

“On the Canadian side, the job report was probably better than what people expected but I think in the long-term everyone believes we’re going to get hurt by what’s going on in the U.S.,” said Brian Pow, vice president, research and equity analyst at Acumen Capital Partners, in Calgary, Alberta.

“Obviously their housing market is unraveling at a pretty quick pace and people really don’t see a real short-term solution to it.”

Also pulling the Toronto benchmark down, resource shares declined while investors locked in profits. The materials sector was off 1.8 percent, while Goldcorp (G.TO) was down C$1.28, or 2.9 percent, at C$42.70, and Agnico-Eagle Mines (AEM.TO) slipped C$1.29, or 1.8 percent, to C$72.31.

NovaGold Resources (NG.TO) was off 68 Canadian cents, or 6.4 percent, at C$9.91 after the company canceled a C$130 million share offering, blaming price conditions, after announcing the offer the night before.

Among energy shares, Imperial Oil (IMO.TO) fell C$1.88, or 3.3 percent, to C$55.42, and Suncor Energy (SU.TO) gave up C$1.36, or 1.3 percent, to C$106.41. The group overall was down 0.7 percent.

On the upside, the financials sector edged up 0.2 percent, as investors scooped up recently depressed stocks. Bank of Montreal (BMO.TO) pulled out of a seven-day slump, gaining C$1.05, or 2.5 percent, to C$43.02. Canadian Imperial Bank of Commerce (CM.TO) was up 52 Canadian cents, or 0.8 percent, at C$62.10.

“Going into the weekend, I don’t think any of the shorts really want to hold their positions, so I would say that’s probably a lot of covering with turnaround on some of these stocks,” Pow said.

Contract drug maker Patheon PTI.TO fell 25 Canadian cents, or 7.4 percent, to C$3.15 after it said its first-quarter loss widened due to losses at its operations in Puerto Rico and the falling U.S. dollar.

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

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