May 11, 2009 / 2:33 PM / 10 years ago

CANADA STOCKS-TSX dives as oil, gold prices drop

* TSX falls below 10,000, but then pares losses

* Falling commodities lead the way lower (Updates with activity after market open, comments)

TORONTO, May 11 (Reuters) - Toronto’s main stock market fell on Monday morning as oil and other commodity prices weakened and as investors took profits following strong gains last week.

Resource prices weighed on the commodity-heavy index as U.S. crude oil backed off a six-month high and was trading below $58 a barrel and gold prices softened.

Toronto’s energy group slumped 3.45 percent, led by a 3.5 percent drop to C$63.13 for oil company EnCana (ECA.TO). That was followed by Suncor Energy (SU.TO), off 4.5 percent at C$35.58.

The materials group fell 1.4 percent as gold-mining stocks were among the weakest components.

“Resources are a key part of it. There’s nothing significant other than they had runup last week. It’s just the inevitable give-up time,” said John Ing, president of Maison Placements Canada.

At 10:10 a.m. (1410 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 176.17 points, or 1.72 percent, at 10,061.82. Earlier, the index fell more than 2 percent to as low as 9,995.82.

Nine of the index’s 10 main groups were lower.

Investors sold to lock in recent gains. The index rose 7.8 percent last week, closing out the week at its highest level in six months on optimism over surprisingly strong jobs data and the outlook for the U.S. financial system.

The TSX’s decline was in line with other stock markets. European stocks were lower, while U.S. stocks fell at the open as several major banks announced large common stock offerings to repay government bailout funds and investors took profits following a strong run. [ID:n]

In other news, Canadian fertilizer maker Agrium Inc AGU.TO raised its takeover offer for U.S. rival CF Industries (CF.N) on Monday. CF spurned Agrium’s earlier $3.8 billion bid. Agrium was off 1.2 percent at C$51.40. [ID:nN11504828]

$1=$1.16 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway

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