April 7, 2009 / 2:42 PM / 10 years ago

CANADA STOCKS-TSX dragged lower by bank woes, lower oil

* TSX falls 136 points to 8,879.71

* Banks and energy shares headline drop

* Materials only group in higher territory (Adds details)

By Frank Pingue

TORONTO, April 7 (Reuters) - Toronto’s main stock index was down more than 1.5 percent on Tuesday morning as concerns about toxic assets rattled shares of banks and insurers, while a drop in oil prices pulled down the energy sector.

The financial sector was down 1.7 percent following news that the International Monetary Fund was about to forecast that toxic assets racked up by banks and insurers could hit $4 trillion. [ID:nT186243]

Royal Bank of Canada (RY.TO) was down 2.7 percent at C$37.17, while Toronto-Dominion Bank (TD.TO) fell 2.3 percent to C$44.22.

“The toxic assets are obviously key, and with oil prices underneath $50 (a barrel) that’s quite a bit of negative for Canada,” said Sal Masionis, stockbroker at Brant Securities.

The price of oil, a key Canadian export that often influences direction for the TSX, pulled the energy sector down by 2.65 percent.

Shares of EnCana Corp (ECA.TO), the biggest drag on the overall index, were down 3.7 percent at C$52.84, while Canadian Natural Resources (CNQ.TO) was off 3.2 percent at C$51.77.

At 10:25 a.m. (1425 GMT), the S&P/TSX composite index .GSPTSE was down 136.46 points, or 1.51 percent, at 8,879.71. Nine of the TSX’s 10 sectors were lower.

The materials group, home to resource companies, rose 0.95 percent and was the only sector in higher territory, helped mainly by firmer prices for gold.

Goldcorp (G.TO) shares rallied 2.8 percent to C$38.41 and Barrick Gold Corp (ABX.TO) was up 2.4 percent at C$36.46.

Masionis also said the TSX, which is coming off four weeks of gains, could be in for some selling as aluminum company Alcoa Inc (AA.N) is scheduled to kick off a quarterly reporting season on Tuesday that is expected to be gloomy.

“This is will be a pretty brutal earnings season but that’s is partly priced into the market,” Masionis said.

The four-week rally by the TSX followed its plummet in early March to its lowest level in more than five years, which left many stocks at severely reduced levels.

$1=$1.24 Canadian Editing by Peter Galloway

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