* Energy issues fall as oil drops below $68 a barrel
* More rate cuts seen as retail sales drop
* Investors digest corporate results from Husky, CN Rail
TORONTO, Oct 22 (Reuters) - The Toronto Stock Exchange’s main index fell sharply on Wednesday morning as sliding crude oil prices dragged down energy issues and a gloomy outlook for the broader economy and corporate earnings weighed on sentiment.
Shortly after 11:15 a.m. (1515 GMT), the S&P/TSX composite index .GSPTSE was down 226.39 points, or 2.3 percent, at 9,569.41, with eight of 10 main groups lower.
The decline adds to Tuesday’s steep losses, which broke a two-day winning streak, amid falling commodity prices and investor disappointment over a smaller than expected rate cut by the Bank of Canada.
More rate cuts are seen with Wednesday’s gloomy data as Canadian retail sales in August dropped for the first time in six months and the composite leading indicator for September was pulled down by sharp declines in the stock market. [ID:nN22363236]
Earnings on both sides of the border are also in focus, said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
“You’re getting lower earnings over comparable quarters from most companies, which is obviously validation for lower stock prices,” he said.
“Perhaps of greater issue is that a lot of companies are providing guidance going forward that they expect a more challenging business environment for whatever their businesses are.”
Husky Energy HSE.TO said after the bell on Tuesday that its profit jumped 65 percent as oil prices hit a record before the global financial meltdown prompted a major pullback. Husky did not give hints of spending plans for next year but did not claw back this year’s spending. [ID:nN21528561]
Canadian National Railway CNR.TO said profit rose in the third quarter, and declined to make a specific forecast for its financial performance in 2009 due to economic uncertainty. It said it still expects it will be able increase base pricing in the 4 percent to 5 percent range, as in 2008. [ID:nN21314467]
Oil prices dropped to near 16-month lows below $68 a barrel on concerns that a widespread economic downturn could slash demand and mute the impact on prices that any OPEC supply cuts might have. [ID:nT335978]
The TSX oil and gas sector declined 5.7 percent, while the mining-heavy materials group was also one of the major decliners, down 3.7 percent.
Both groups, heavily represented on the Toronto index, have suffered steep losses in recent weeks as commodity prices have slid due to recession fears. Quarterly results for many companies in those two groups will be released in the next two weeks and may put additional pressure on the Toronto index.
“Those commodity-based investments are far more sensitive to economic activity, up and down. So we’ve seen significant selloffs in a lot of the commodities and now we’re seeing similar selloffs in the commodity-related companies,” said Chandler.
Base metal producer Teck Cominco TCKb.TO is set to kick off the results parade of miners on Wednesday after market close. [ID:nN2129586]
Research in Motion RIM.TO was among the top net gain leaders on Wednesday, up 4.8 percent at C$64.48. The shares have dropped sharply in recent days on pessimistic brokerage reports on sales of BlackBerry smartphones. ($1=$1.25 Canadian) (Reporting by Ka Yan Ng and Jennifer Kwan; editing by Rob Wilson)