October 22, 2008 / 8:52 PM / 10 years ago

CANADA STOCKS-Slide in commodities hits Toronto index

* Energy issues hit as oil falls below $67 a barrel

* Materials drop as gold, base metal prices slide

* Investors eye earnings for clues to company outlook (Adds official closing figures, analyst quotes, details)

TORONTO, Oct 22 (Reuters) - The Toronto Stock Exchange’s main index closed nearly 6 percent lower on Wednesday as resource issues sank along with commodity prices on concerns a global economic slowdown will slash demand, while worries over corporate earnings added to the cheerless mood.

The decline adds to Tuesday’s 4.4 percent loss, which broke a two-day winning streak, as the threat of a global recession battered commodity prices across the board. [ID:nLM267609]

Investors are also watching earnings reports from both sides of the border to find clues about company operations or if they are guiding market expectations lower.

“We are in the teeth of the earnings season and many companies are going to report disappointing numbers and analysts are going to take down those numbers,” said George Vasic, equity strategist at UBS Securities Canada.

“Even though people knew that was on the horizon as we moved into October, it’s still jolting when it occurs.”

The S&P/TSX composite index .GSPTSE closed down 558.92 points, or 5.71 percent, at 9,236.88, with all 10 of its main groups lower.

Earlier this week, the market had reflected investor disappointment over a smaller than expected rate cut by the Bank of Canada.

Wednesday’s cheerless data showed Canadian retail sales in August dropped for the first time in six months and the composite leading indicator fell, giving more credence to those anticipating a slowdown and more rate cuts by the Bank of Canada. [ID:N22449046]

The resource-laden materials group led the way down, falling a hefty 11.1 percent as gold futures fell to their lowest level in over a year and base metal prices also retreated.

Miner Agnico-Eagle (AEM.TO) was down 24.7 percent to C$31.75, while Potash Corp of Saskatchewan POT.TO fell 7.4 percent to C$82.92.

The big oil and gas sector declined 9.1 percent as oil prices dropped $5.43 to $66.75 a barrel after rising U.S. fuel inventories added to signs a widespread economic downturn could gut demand and offset possible cuts by OPEC. [ID:nN22382017]

Canadian Natural Resources (CNQ.TO) dropped 11.4 percent to C$49.26. ($1=$1.25 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)

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