February 12, 2008 / 9:45 PM / 11 years ago

UPDATE 4-Toronto stocks dragged lower by resources

(Updates numbers, adds details, quotes)

TORONTO, Feb 12 (Reuters) - Early gains on the Toronto Stock Exchange’s main index evaporated on Tuesday, leaving the index lower as a selloff of miners undercut optimism over a rescue plan for U.S. bond insurers.

The materials sector slid 2.1 percent, while Fording Canadian Coal Trust FDG_u.TO was down C$1.75, or 3.8 percent, to C$44.25, after it posted a 57 percent decline in profit. The metallurgical coal producer also remained quiet about a potential sale of its business.

Miner Teck Cominco TCKb.TO — a major stakeholder in Fording — fell C$1.67, or 4.8 percent, to C$32.88 the day after it said its profit had fallen 68 percent amid lower zinc and coal prices, and one-time charges.

On Tuesday, Teck played down any moves on dividends or share buybacks until further decisions are made on some major projects.

Financials, which had prompted a strong rally earlier in the day, were up 0.2 percent after billionaire investor Warren Buffett said he had made an offer to three of the top U.S. bond insurers to reinsure $800 billion in municipal debt.

In Toronto, financial shares were mixed. Bank of Nova Scotia (BNS.TO) was up 14 Canadian cents, or 0.3 percent, at C$48.46, and Bank of Montreal (BMO.TO) was down 65 Canadian cents, or 1.2 percent, at C$54.80.

“It looks like some of the selling in gold and select commodities groups has neutralized the buying in some of the other groups, specifically the financials,” said Elvis Picardo, investment strategist at Northern Securities Inc in Vancouver.

“The market is still extremely nervous, and when someone like Warren Buffett comes out and makes a comment like that, it does tend to shore up confidence, but in this case it hasn’t proved to be too long lasting.”

The S&P/TSX composite index .GSPTSE closed down 43.54 points, or 0.33 percent, at 13,087.38 with three of its 10 main groups to the downside. The benchmark had earlier moved up nearly 90 points and had advanced for the past three sessions.

The gold-producers subindex lost 3.8 percent while gold stumbled on lower demand out of India, a major market.

Barrick Gold (ABX.TO) fell C$1.89, or 3.8 percent, to C$48.20, and Kinross Gold (K.TO) was down C$1.18, or 5.2 percent, at C$21.75.

The heavyweight energy sector slid 0.5 percent while oil prices eased on lessening worries that Venezuela would make good on its threat to halt crude shipments to the United States.

$1=$1 Canadian Reporting by Leah Schnurr; Editing by Rob Wilson

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