August 22, 2008 / 9:42 PM / 10 years ago

UPDATE 3-Toronto stocks fall on weaker oil, metals prices

* Main Toronto stock index eases 0.68 percent

* Weaker commodity prices weigh on energy, mining stocks

* Index rises 2.7 percent on the week (Adds details, U.S. numbers)

By Cameron French

TORONTO, Aug 22 (Reuters) - Toronto stocks finished a strong week on a losing note on Friday, retreating on the back of sagging oil and metals prices, with losses offset partly by stronger financial issues.

A 5.4 percent drop in oil prices — the biggest drop since 2004 — yanked the TSX’s heavily-weighted energy subgroup down 2.35 percent, while weaker prices for metals such as copper and gold dragged the materials group down 2.34 percent.

The retreat followed two days of strong gains for the index after it hit a five-month low on Tuesday.

“I think the market is trying to establish maybe a short-term bottom, but struggling to do so,” said Douglas Davis, president of Davis-Rea in Toronto.

The S&P/TSX composite index .GSPTSE fell 91.93 points, or 0.68 percent, to close at 13,447.29. For the week, it rose 2.7 percent. The blue-chip S&P TSX 60 index .TSE60 eased 6.12 points, or 0.76 percent, to finish at 804.02.

Among energy issues, Talisman Energy TLM.TO fell 4.1 percent to C$18.42, while Husky Energy (HSE.TO) eased 3.7 percent to finish at C$46.67.

On the materials side, Yamana Gold (YRI.TO) dropped 5.3 percent to C$11.37, while Iamgold (IMG.TO) eased 4.9 percent to C$6.27.

All told, 274.1 million shares changed hands, valued at C$4.6 billion, while declining stocks outnumbered advancers 787 to 636.

Outside of the resource sectors, the index was largely stronger, with seven of the 10 TSX subgroups making gains.

Financial issues led the charge with a 1.4 percent rise, fueled by mutual fund seller IGM Financial (IGM.TO), up 2.5 percent at C$42.18, and income trust CI Financial CIX_u.TO, whose units rose 5.4 percent to C$22.11, after the company said it had talked with a number of parties about possible strategic combinations.

“When the U.S. market goes up, our financial sector tends to improve,” Davis said.

In New York, the Dow Jones industrial average .DJI surged 197.85 points, or 1.73 percent, to 11,628.06, while the tech-heavy Nasdaq market .IXIC climbed 34.33 points, or 1.44 percent, to 2,414.71.

Helping the U.S. market, and banking stocks in general, were signs that hard-hit U.S. brokerage Lehman Brothers LEH.N may attract a major investor.

Also helping boost the TSX composite were shares of airline WestJet (WJA.TO), which rose 3.3 percent to C$15.34, while drugmaker Biovail BVF.TO climbed 2.4 percent to C$10.79. ($1=$1.05 Canadian) (Editing by Cameron French)

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