August 22, 2008 / 3:20 PM / 11 years ago

UPDATE 2-Toronto stocks slip as investors take profits

* Resources slump after mid-week surge

* CI Financial says has discussed strategic combinations

* HudBay dips after says will shut zinc operation (Adds details)

TORONTO, Aug 22 (Reuters) - The Toronto Stock Exchange’s main index fell on Friday morning, pulled lower by heavyweight resource issues as investors took profits following a surge by commodities this week.

The energy and materials groups slipped 1.6 percent and 1 percent, respectively.

Among oil shares, Canadian Natural Resources (CNQ.TO) sank 2.1 percent to C$87.63.

Copper and zinc miner HudBay Minerals Inc (HBM.TO) slipped 2.3 percent to C$11.14, while Barrick Gold (ABX.TO) was down 1.5 percent at C$36.94.

“I think the rally we’ve had over the last couple of days explains it,” said Rick Hutcheon, president and chief operating officer at RKH Investments. “A move like that needs to be corrected.”

By mid-morning, the S&P/TSX composite index .GSPTSE was down 36.28 points, or 0.27 percent, at 13,502.94, with half its 10 main groups lower. The market fought its way back after dropping more than 100 points at the open.

The index made lofty gains on Wednesday and Thursday on the back of surging commodity prices, which have helped lift the TSX about 3 percent so far this week.

Oil slipped below $120 a barrel as the U.S. dollar strengthened, while gold and base metals sagged.

Cushioning the losses were financials, up 1.3 percent, with with CI Financial CIX_u.TO ahead 6 percent at C$22.22 after it said on Friday it has had discussions with a number of parties about possible strategic combinations.

The National Post reported Bank of Nova Scotia (BNS.TO) is in talks to sell its mutual fund division to CI Financial in a deal that would give the bank a big stake in CI. See [ID:nN22370923]. Scotiabank was up 1.1 percent at C$48.33.

Elsewhere, Royal Bank of Canada (RY.TO) added 1.4 percent to C$45.91. The Globe and Mail newspaper reported on Friday that Royal was in settlement talks with U.S. regulators over its role in the U.S. auction-rate securities market. See [ID:nN22373526].

Financials also got some help from upbeat news from the United States, where stocks rose after Federal Reserve Chairman Ben Bernanke said the recent decline in commodity prices and stabilization of the U.S. dollar were encouraging. See [ID:nN22434443].

In resources, mid-tier copper and zinc producer HudBay Minerals sagged after it said late on Thursday it is closing the Balmat, New York, zinc mine and concentrator due to low prices for the metal. The company is expected to cut 200 jobs. See [ID:nN21300513]. ($1=$1.05 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)

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