October 21, 2008 / 2:32 PM / 10 years ago

UPDATE 1-Toronto stocks fall sharply on weaker commodities

* Energy issues lead decline

* Gold subindex down 6 percent

* Bank of Canada 25 bps rate cut less than expected (Adds details)

TORONTO, Oct 21 (Reuters) - The Toronto Stock Exchange’s main index fell hard at the open on Tuesday as easing commodity prices put pressure on resource issues and profit-taking took hold after two consecutive days of strong gains.

The oil and gas sector fell 4.3 percent as oil slipped to nearly $71 a barrel, pressured by expectations that a global recession will cut demand for oil, which could limit the impact of any supply cuts by OPEC.[ID:nSP339775]

Suncor Energy (SU.TO) was off 5.5 percent at C$28.83, while EnCana (ECA.TO) lost 3.1 percent to C$55.33.

Shortly after 9:50 a.m. (1350 GMT), the S&P/TSX composite index .GSPTSE was down 287.17 points, or 2.8 percent, at 9,964.23, with eight of its 10 main groups lower.

“I think the markets are going to be very volatile for the foreseeable future. Just because you have one good day doesn’t mean you have a trend. I don’t see any uptrend here yet,” said Douglas Davis, president at Davis-Rea.

“In order to form a market bottom, you need a lot of volatility. The market has got to make a decision as to where the bottom is. It may not have hit bottom yet. It probably has to test lower levels one more time.”

The materials group was also under pressure, falling 5.5 percent, on the falling price of gold. The gold mining subindex was off 6 percent, as Kinross Gold (K.TO) fell 7.3 percent to C$13.24.

The Bank of Canada cut its key interest rate by a quarter-point, less than expected, to 2.25 percent and said it would likely have to ease further to combat the effects of the global financial crisis. [ID:nN21528331]

$1=$1.20 Canadian Reporting by Ka Yan Ng; Editing by Peter Galloway

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