June 24, 2008 / 9:16 PM / 11 years ago

UPDATE 4-Weak resources help pummel Toronto stocks

(Adds details, quotes)

* TSX slumps more than 280 points or nearly 2 percent

* Energy sector leads slide amid demand concerns

* Consumer shares hurt by worries over spending outlook

By Leah Schnurr

TORONTO, June 24 (Reuters) - The Toronto Stock Exchange’s main index shed nearly 2 percent on Tuesday, dragged down by skidding resource issues amid investor concerns over the long-term prospects for oil demand.

A see-saw session for crude prices provided scant support for the benchmark, as oil finally settled up 26 cents at $137.00 a barrel amid worries over supply disruptions in Nigeria and increasing tensions between Israel and Iran.

On Bay Street, the energy sector tumbled 3.2 percent, with Canadian Natural Resources (CNQ.TO) falling C$3.60, or 3.5 percent, to C$100.10 and Suncor Energy (SU.TO) down C$3.67, or 5.7 percent, at C$61.31.

“I think the anticipation is that there will be some sort of drop in demand,” said Adrian Mastracci, portfolio manager and president of KCM Wealth Management Inc. in Vancouver.

Mastracci also noted that there is still a disconnect between energy stocks and the price of oil, as the sector’s shares have not risen as quickly, or as high as the commodity.

The S&P/TSX composite index .GSPTSE closed down 282.22 points, or 1.92 percent, at 14,409.60 with all 10 of its main sectors lower. It was the biggest drop since mid-March.

The materials sector was down 2.1 percent. Potash Corp of Saskatchewan POT.TO was the biggest net loser, down C$9.90, or 4.1 percent, at C$229.99. Fellow fertilizer producer Agrium AGU.TO fell C$5.48, or 4.8 percent, to C$108.60.

Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd. in Calgary, said that people are becoming doubtful as to whether high oil prices can last.

“But that being said, we’re still seeing signs that Chinese demand is going to more than offset any kind of demand destruction that we’re seeing in the North America, so there’s an interesting push-pull,” Kerkovius added.

The consumer discretionary and staples groups gave up 1.1 percent and 1.4 percent respectively, amid persistent concerns over what impact the domino effect of high energy prices will have on consumers’ appetite for spending.

Crystallex International KRY.TO was the biggest percentage gainer on the TSX, spiking 66.2 percent after it said Venezuela was reconsidering the denial of the mining permit for its Las Cristinas gold deposit. Crystallex stock closed up 43 Canadian cents at C$1.08.

Market-watchers will be keeping their eyes pointing south of the border on Wednesday for a scheduled interest rate decision by the U.S. Federal Reserve.

Analysts said the Fed will likely hold rates steady and they will be paying attention for strong language on inflation in its statement.

Market volume was 437 million shares worth C$8.2 billion. Decliners outpaced advancers 989 to 592. The blue chip S&P/TSX 60 index .TSE60 closed down 19.23 points, or 2.19 percent, at 858.47.

In New York, stocks fell as data showed U.S. consumer confidence hit a 16-year low, while United Parcel Service (UPS.N) issued a profit warning that fueled fears about corporate results.

The Dow Jones industrial average .DJI closed down 34.93 points, or 0.29 percent, at 11,807.43, while the Nasdaq composite index .IXIC slipped 17.46 points, or 0.73 percent, to 2,368.28. ($1=$1.01 Canadian) (Editing by Rob Wilson)

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