August 15, 2008 / 8:46 PM / 11 years ago

UPDATE 2-Toronto stocks drop sharply as commodities fall

(Updates figures, adds details)

* TSX index plunges to lowest close since March

* Commodity retreat drags down miners and energy companies

* Seven of ten subgroups retreat

TORONTO, Aug 15 (Reuters) - The Toronto Stock Exchange’s main index plunged to its lowest level since March on Friday as resource stocks fell on retreating oil and metals prices.

The S&P/TSX composite index .GSPTSE ended the session down 262.21 points, or 2 percent, at 13,096.70. For the week, the index dropped 1.8 percent.

Oil dropped to below $114 a barrel on faltering global demand and rising supply, sliding further from its record high above $147 in July, and pulling the heavily weighted TSX energy subgroup down 3.2 percent.

The materials subgroup was even harder hit, dropping 4.2 percent on falling prices for copper, zinc, and particularly gold, which dropped below $800 an ounce for the first time since last December.

“Gold and oil seem to have locked together, pretty much. When oil comes down, gold seems to come down,” said John Kinsey, a portfolio manager at Caldwell Securities in Toronto.

Among oil and gas producers, Suncor Energy (SU.TO) fell 4.8 percent to C$53.34, while EnCana Corp (ECA.TO) dropped 4.2 percent to C$70.04.

The materials sector was weighed down by Eastern Platinum (ELR.TO), which dropped 8.6 percent to C$1.39, and Goldcorp (G.TO), which fell 5.4 percent to C$31.16.

Uranium producer Cameco Corp (CCO.TO) dropped 8.4 percent to C$30.52 as analysts downgraded the stock on worries of weaker realized uranium prices and flooding at Cameco’s Cigar Lake uranium project in Saskatchewan.

Commodities have been hit across the board as worries over the health of the global economy continue to weigh. But the selloff has also eased anxieties over inflation and consumer spending.

All told, seven of the 10 TSX subgroups retreated during the session.

On the economic front, Canada Mortgage and Housing Corp said that housing starts will moderate in 2008 and then slide further in 2009, as demand sags and the costs of carrying a mortgage rise.

$1=$1.06 Canadian Reporting by Cameron French; Editing by Peter Galloway

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