August 19, 2008 / 1:18 PM / in 9 years

Toronto stocks to open lower on weak commodities

*Gold and oil weak

*Fears over health of U.S. financial sector a concern

*Mega Brands may be in focus after quarterly results

TORONTO, Aug 19 (Reuters) - The Toronto Stock Exchange’s main index is expected to open lower on Tuesday, tugged down by weakness in oil and gold, and as worries over the health of the U.S. economy take hold.

Oil backed off to below $113 a barrel as supply fears eased, while gold also weakened on a strengthening U.S. dollar. Weakness in both underlying commodity prices could help to push the key energy and materials stocks down.

The market could cling to economic data in the United States, said Sal Masionis, a stockbroker at Brant Securities.

A U.S. report showed that core producer prices rose faster than expected in July, heightening concerns about the health of the economy and profit outlook. Housing data there was soft, as expected.

“The majority of our trade is with the U.S. and psychologically everybody is looking at what is happening in the States,” said Masionis.

Masionis added the Canadian market may also be soured by a forecast by JPMorgan Securities that U.S. investment bank Lehman Brothers LEH.N will likely take further write-downs in the third-quarter.

The Toronto Stock Exchange main index closed slightly higher on Monday, as a rise in resource shares overcame persistent concerns over more fallout from the credit crunch.

Commodities have been hit across the board as worries over the health of the global economy continue to weigh, steering the benchmark index on a choppy course.

In company news, Petro-Canada PCA.TO could be in the spotlight on a report that the government of Newfoundland is set to finalize a deal with Chevron Corp CVX.N this week to develop the C$6 billion offshore Hebron oil field.

The oil field is co-owned by Petro-Canada PCA.TO, Exxon Mobil Corp XOM.N and StatoilHydro STL.OL. For details, see [ID:nN18480365]

On the earnings front, toymaker Mega Brands Inc MB.TO could see action after it slipped to a second-quarter loss on Tuesday, as lower sales and more product recall charges hurt results. For details, see [ID:nN19520038]

Elsewhere, Rogers Communications Inc RCIb.TO, the owner of Canada’s biggest wireless carrier, and Research In Motion Ltd RIM.TO RIMM.O could grab some of the limelight.

Rogers said it will start offering Research In Motion’s new BlackBerry Bold on Thursday. For details, see [ID:nN18479076]

The S&P/TSX composite index .GSPTSE begins the day at 13,119.37, up 22.67 points, or 0.2 percent.

In New York, stock futures were lower after the PPI data. ($1=$1.06 Canadian) (Reporting by Jennifer Kwan; Editing by Scott Anderson)

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