January 7, 2009 / 9:41 PM / 10 years ago

CANADA STOCKS-TSX falls hard on oil price, profit-taking

* Commodity-related issues drop as oil, gold prices fall

* All of the TSX’s 10 sectors fall

* U.S. jobs data boosts fears of extended recession (Updates with closing figures, adds details and comment)

By Ka Yan Ng

TORONTO, Jan 7 (Reuters) - Toronto’s main stock index dropped 3.7 percent on Wednesday as oil and gold shares slid with commodity prices and profit-taking set in after six sessions of gains.

Startling job losses in the United States. and a warning from tech bellwether Intel Corp also cast a pall on investor sentiment as they heightened fears of a deep extended recession.

The energy sector slid 6.14 percent as the price of oil slumped nearly $6 a barrel to settle at $42.63 after a U.S. government inventory report showed supplies rose more than expected. Canadian Natural Resources, the index’s biggest mover, fell 8.3 percent to C$51.32. EnCana (ECA.TO) lost 5 percent to C$57.80.

“Oil by far was the biggest negative. People were looking for inventories to build, but they built a lot more than expectations and that’s why the price of oil has come down,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“But the price of oil has rallied a fair bit also in the last two or three weeks.”

The S&P/TSX composite index .GSPTSE finished down 3.7 percent, or 350.77 points, at 9,121.32. All 10 main groups were in the red.

The index was ripe for a selloff after six consecutive sessions of strong gains. The heavyweight oil and gas group, along with financials and materials, the other two big sectors, have enjoyed strong gains since the end of 2008, helping to lift the overall index to a two-month high in the first few trading days of 2009.

The financial sector fell 2.5 percent, led lower by Manulife (MFC.TO) and Royal Bank of Canada (RY.TO). Manulife, Canada’s biggest insurer, fell 5.3 percent to C$22.83, while Royal, Canada’s biggest bank, lost 2.5 percent to C$37.10.

Gold-mining issues fell with the price of gold, which slipped more than 3 percent. That weighed on the materials group, which dropped 5.7 percent. Barrick Gold (ABX.TO) was down 6.2 percent at C$37.34.

$1=$1.20 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway

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