May 7, 2009 / 7:14 PM / 10 years ago

CANADA STOCKS-TSX sinks 2 pct as financials, oil drag

* Big Three insurers report weaker-than-expected results

* Energy group succumbs to oil price reversal

* TSX ranges 9,922.03-10,340.78, touched 2009 high (Updates to midafternoon)

TORONTO, May 7 (Reuters) - Toronto’s main stock index sank on Thursday afternoon, pulled down by weaker-than-expected results from Canada’s big insurers and a reversal in crude oil prices.

The financial group, an influential sector that makes up a third of the index weighting, was off more than 3 percent as the country’s top three insurers reported quarterly results that reflected ailing stock markets, credit impairments and the need to shore up reserves. [ID:nN07467694]

Manulife (MFC.TO) fell 3.4 percent to C$21.96, while Sun Life (SLF.TO) fell 4.6 percent to C$28.58. Great-West Life (GWO.TO) fell 4.2 percent to C$21.94.

Banks were also under pressure, with Royal Bank of Canada (RY.TO) off 2.78 percent at C$43.75, ahead of the results of “stress tests” of major U.S. banks due at 5 p.m. (2100 GMT). Leaked reports show that about half will not need new capital. [ID:nL776802]

The energy group was off 1.47 percent as the price of oil reversed after sharp gains. The materials group fell 1 percent, while gold issues sheltered some of the losses because the price of gold remained firm though off highs.

At 2:45 p.m. (1845 GMT), the S&P/TSX composite index .GSPTSE fell 207.42 points, or 2.04 percent, to 9,936.01. Nine of the index’s 10 sectors were higher.

Profit-taking was also cited as a factor as the index has made more than a 30 percent run higher since hitting a low in March.

“It needed a rest,” Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary. “Taking a little bit of money off is probably a good idea.”

He said he expects to see a modest correction on the index, but the general trend was higher.

The index shot out of the gate at the open, rising close to 2 percent and reaching a 2009 high. But gains faded quickly. The index rose to 10,340.78 earlier, its highest level since October 14, and fell as low as 9,922.03 in the afternoon.

$1=$1.17 Canadian Reporting by Ka Yan Ng; Editing by Jeffrey Hodgson

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