September 8, 2008 / 4:49 PM / 10 years ago

UPDATE 3-Toronto stocks retreat as resources drag

*TSX retreats from big early gain

*Resources weigh on worries over demand for commodities

*Financials gain after U.S. mortgage bailout plan (Updates to midday)

TORONTO, Sept 8 (Reuters) - The Toronto Stock Exchange’s main index was lower at midday on Monday, retreating from a big early gain as faltering resource and tech shares overshadowed earlier enthusiasm over the mortgage bailout plan in the United States.

The heavyweight materials and energy sectors led the way down as worries over demand for commodities in the face of slowing global growth hampered resource shares.

The energy group was also hurt by a retreat in oil prices as the U.S. dollar rose to its highest level against the euro since October. In the oil patch, Canadian Natural Resources (CNQ.TO) was down 3.9 percent at C$49.87.

The small technology sector also slumped, with tech bellwether Research In Motion RIM.TO falling 5.9 percent to C$106.60.

The S&P/TSX composite index .GSPTSE was down 53.83 points, or 0.42 percent, at 12,762.59 with half of its 10 main sectors in negative territory.

The benchmark index had shot up as much as 2.7 percent early in the session after the U.S. government took control of mortgage finance giants Fannie Mae FNM.N and Freddie Mac FRE.N on Sunday, the latest in a series of emergency steps to help the beleaguered U.S. economy.

The bounce had come on the heels of last week’s nearly 7 percent loss for the TSX as it racked up three consecutive days of steep falls.

By midday on Monday, the materials and energy sectors were down 3.2 percent and 2.1 percent, respectively. Fertilizer producer Potash Corp of Saskatchewan POT.TO gave up 5.3 percent to C$163.15, while Suncor Energy (SU.TO) slid 5.4 percent to C$49.87.

The tech sector fell 2.2 percent, with Nortel Networks NT.TO down 3 percent at C$5.90.

On the upside, the financial sector held on to its gains as the entire group advanced. Canadian Imperial Bank of Commerce (CM.TO) rose 4.2 percent to C$64.91, and Toronto-Dominion Bank (TD.TO) was up 3.4 percent at C$63.03, while the sector as a whole rose 2.6 percent. ($1=$1.07 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)

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