July 23, 2008 / 3:39 PM / 11 years ago

UPDATE 1-Toronto stocks slip as gold, oil prices drop

(Adds details)

* U.S. gold price tumbles, dragging materials down

* Oil price drop weighs on energy sector

* Financials extend gains on U.S. bank results


TORONTO, July 23 (Reuters) - The Toronto Stock Exchange’s main index was lower on Wednesday morning, as slide in gold and oil prices weighed on the resource-laden index.

U.S. gold tumbled more than 2 percent to around $924 an ounce as as the metal’s appeal as an inflation hedge retreated amid lower crude prices and a stronger U.S. dollar.

The price of oil fell for a second straight session to around $126 a barrel as worries eased that Hurricane Dolly would hit Gulf of Mexico production, and a U.S. government report showed a larger than expected rise in stockpiles.

Commodities are getting crushed because they’ve been “sterling performers,” said John Ing, president of Maison Placements Canada.

“The credit crunch has meant that the commodity players are also facing tighter margin requirements but the prospect of higher financing costs,” Ing added.

Among the big names feeling the pressure was Barrick Gold (ABX.TO), the world’s largest producer, which was down more than 5 percent.

Late on Wednesday morning, the S&P/TSX composite index .GSPTSE was off 71.48 points, or 0.5 percent, at 13,571.71, with six of its 10 main groups in the red.

The energy and materials sectors tumbled 1.9 percent and 3.9 percent, respectively.

Barrick slid C$2.58, or 5.36 percent, to C$45.54, while Kinross Gold (K.TO) fell C$1.37, or 6.01 percent, to C$21.28.

In the oil patch, EnCana (ECA.TO) fell C$1.57, or 2 percent, to C$75.60, while Nexen Inc NXY.TO fell 91 Canadian cents, or 2.8 percent, to C$31.91.

On the upside, financials, which have gained about 6 percent in the past week on upbeat results in the troubled U.S. financial sector, rose 1.8 percent.

Investors have been scooping financial issues as a string of upbeat quarterly results from U.S. banks, badly battered by the credit crunch, led to hopes that the sector was a step closer to stabilizing.

Royal Bank of Canada (RY.TO) rose 90 Canadian cents, or 2 percent, to C$46.12.

In company news, shares of Precision Drilling Trust PD_u.TO slipped C$1.28, or 5.4 percent, to C$22.30. Earlier on Wednesday, Canada’s biggest oil and gas contract driller reported a drop in second-quarter profit. ($1=$1.01 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)

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