* TSX ends down 2.76 percent at 9,949.59
* Energy sector, down 4.4 pct, leads TSX lower
* Oil retreat from 6-month high helps spark drop (Adds details, quote)
By Jennifer Kwan
TORONTO, May 21 (Reuters) - Toronto’s main stock market index fell on Thursday after a two-day rally as a drop in oil prices from six-month highs pressured energy shares.
Oil CLc1 fell to settle at $61.05 a barrel from Wednesday’s half-year high above $62 as signs of job market weakness fanned concerns about economic recovery. [ID:nSIN101873]
Toronto also followed world stocks lower as several U.S. economic reports fueled doubts about a quick economic recovery, while Standard & Poor’s revised its UK ratings outlook lower.[ID:nN21281189], stoking concern that Washington’s growing deficit could lead to a credit rating downgrade for the United States. [ID:nN21308232]
The glum news came a day after the U.S. Federal Reserve, in minutes released from its April policy meeting, cut its outlook for economic growth over the next three years and said a full recovery could take five or six years. [ID:nN21256165]
Financials fell 3.1 percent. Manulife Financial (MFC.TO) retreated 4.6 percent to C$21.39.
“The market has moved way ahead of the economic reality,” said Sal Masionis, stockbroker at Brant Securities.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 282.85 points, or 2.76 percent, at 9,949.59, with all 10 of its main groups lower. In the previous two sessions it had added 4.76 percent and touched its highest level in 2009.
The index is now up about 30 percent from its March lows.
“We’ve had such a phenomenal gain in the short span of 2-1/2 months. Investors are starting to take note of some of the headwinds the global economy may be facing down the road,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
Picardo added the market is due for a “pause” and suspects the index may fall substantially from current levels.
“We’ve come too far, too fast and the market really needs to consolidate these gains,” he said.
As well as oil prices, base metal prices were largely weaker amid sullen market sentiment. [ID:nLL341053]
The TSX’s materials group dropped 1.3 percent, with Potash Corp of Saskatchewan Inc POT.TO down 4.8 percent at C$124.02. Inmet Mining IMN.TO> fell 6.84 percent to C$41.84.
Gold miners got a boost from a rise in the price of bullion, which rose above $950 an ounce on Thursday to a near two-month high as concerns over the health of the U.S. economy drew safe-haven bids.
$1=$1.14 Canadian Editing by Peter Galloway