July 8, 2008 / 3:36 PM / 11 years ago

UPDATE 1-Toronto stocks drop 1 percent as resources retreat

(Updates to midmorning)

*TSX extends recent declines to tumble 1 percent

*Resources lead the fall as commodity prices drop

TORONTO, July 8 (Reuters) - The Toronto Stock Exchange’s main index tumbled on Tuesday morning in volatile trading, extending recent declines, as the influential resource sector was stung by falling oil and other commodity prices.

The energy and materials sectors, which make up about half of the index, were responsible for the lion’s share of the losses, falling 3.7 percent and 2.8 percent, respectively.

The benchmark S&P/TSX composite index .GSPTSE was down 136.03 points, or 0.99 percent, to 13,576.77, though only three of its 10 main sectors fell. The index has lost about 6 percent of its value since last Wednesday, buffeted by declines in resource shares and economic worries.

If the key index closes around these levels, it will be down about 10 percent from its June 6 life high of 15,154.77.

“I think it’s fair enough to say fear seems to be gripping the market,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, adding that broader economic worries over the prospects for growth continue to nag as earnings season gets under way.

The price of U.S. light crude oil CLc1 dived more than 4 percent to below $136 a barrel, as the U.S. dollar gained and worries eased over an Atlantic hurricane. The commodity has shed about $10 this week.

Among energy firms, Canadian Natural Resources (CNQ.TO) was down C$5.74, or 6.2 percent, at C$86.60, while Imperial Oil (IMO.TO) fell C$2.14, or 4.1 percent, to C$50.24.

Losses in the materials group also undermined the market, as miners were battered by declines in the prices of gold and other metals. Inmet Mining IMN.TO was down C$1.44, or 2.2 percent, at C$63.07, and Agnico-Eagle Mines (AEM.TO) eased 93 Canadian cents, or 1.3 percent, to C$71.28.

Still, the broader market held on to gains, as investors picked up shares offering value after recent declines, with the upside led by a 2-percent gain in the financials group. Toronto-Dominion Bank (TD.TO) climbed C$1.35, or 2.2 percent, to C$63.00, and National Bank of Canada (NA.TO) added C$1.21, or 2.5 percent, to C$50.06.

Shares of WestJet Airlines (WJA.TO) were up 88 Canadian cents, or 6.9 percent, at C$13.57, after U.S. domestic carrier Southwest Airlines (LUV.N) said it plans to start a codeshare partnership with the Canadian company. For details, see: [nN08254232].

Drug store chain Jean Coutu Group PJCa.TO edged up 8 Canadian cents, or 1 percent, at C$8.02, after it reported a wider first-quarter loss as it was hurt by its stake in U.S. pharmacy Rite Aid Corp (RAD.N). See: [nN08484904]. ($1=$1.02 Canadian) (Reporting by Leah Schnurr; Editing by Bernadette Baum)

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