July 17, 2008 / 7:38 PM / 11 years ago

UPDATE 3-Toronto stocks tumble along with oil prices

(Updates to late afternoon)

* TSX falls further as resources sag

* Energy issues taken lower by steep selloff in oil

* Nexen falls after disappointing quarterly profit

TORONTO, July 17 (Reuters) - Another sharp drop in oil prices helped wipe out early gains and drag the Toronto Stock Exchange’s main index lower, as resource issues tumbled amid worries over the demand for commodities.

The heavyweight energy sector led the slide, falling 4.8 percent. Concern over U.S. demand for crude and easing political tensions between oil producer Iran and the West took the price of crude down more than $5 to around $129 a barrel.

Nexen Inc NXY.TO sank C$4.82, or 13 percent, to C$32.14 after the oil producer posted a disappointing quarterly profit, as one-time charges and trading losses nearly wiped out its gains from record high oil prices.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 126.87 points, or 0.94 percent, at 13,376.93 with three of its 10 main sectors lower.

The materials group, home to resource shares, also undermined the benchmark, falling more than 3 percent amid fears that red-hot commodity prices might not last.

Potash Corp of Saskatchewan POT.TO fell C$11.64, or 5.2 percent, to C$212.42, and Agnico-Eagle Mines (AEM.TO) was off C$3.76, or 5.1 percent, at C$69.47.

Financials remained a bright spot on Bay Street, gaining 3.3 percent as surprisingly healthy results from U.S. banks buoyed the sector’s outlook.

Canadian Imperial Bank of Commerce (CM.TO) rose C$4.32, or 8.1 percent, to C$57.51, while Bank of Montreal (BMO.TO) was up C$2.92, or 7 percent, at C$44.85. ($1=$1.01 Canadian) (Reporting by Leah Schnurr; editing by Rob Wilson)

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