July 24, 2008 / 3:53 PM / in 9 years

UPDATE 1-Toronto stocks drop with commodity prices

*TSX lower as oils and materials fall

*Banks down on profit-taking

*Aurelian shares soar after takeover news

TORONTO, July 24 (Reuters) - The Toronto Stock Exchange’s main index was sharply lower late on Thursday morning, pulled down by resource and financial-services shares despite strong quarterly results from big names Husky Energy HSE.TO and Potash Corp of Saskatchewan POT.TO.

Oil and gas stocks dropped as the price of oil slid to around $124 a barrel in choppy trade as concerns over slowing demand continued to weigh.

“The hot button is the price of oil,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“That’s where people are taking their clues from. If the price of oil is viewed as strengthening, people will get back into commodities. If the price of oil weakens they’ll sell the commodities and buy the financials and consumer discretionaries.”

But financials also were lower on Thursday due to profit-taking following a run-up of about 16 percent in the past week on upbeat U.S. bank results.

Also weighing on the sector was U.S. housing data that showed a steeper-than-expected drop in home sales.

Late on Thursday morning, the S&P/TSX composite index .GSPTSE was down 147.12 points, or 1.09 percent, at 13,365.54, with eight of its 10 main subgroups lower.

Leading the fall were the big energy and materials sectors, down 1.5 percent and 2.6 percent respectively, while financials slipped 0.8 percent.

Shares of oil company Husky HSE.TO rose C$1.44, or 3.6 percent, to C$41.95 after it reported healthy earnings on Wednesday evening, while fertilizer producer Potash POT.TO was down C$10.28, or 5.2 percent, at C$191.95.

Base metals miner Teck Cominco TCKb.TO fell 83 Canadian cents, or 2.2 percent, to C$38.35 after reporting results on Wednesday evening.

Shares of Aurelian Resources Inc ARU.TO soared 46.1 percent to C$6.46 after Kinross Gold Corp K.TO K.TO said on Thursday it planned to buy Aurelian in a friendly deal worth C$1.2 billion.

Kinross dropped C$1.98, or 9.5 percent, to C$18.86. ($1=$1.01 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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