October 24, 2008 / 9:16 PM / in 9 years

CANADA STOCKS-Small drop as golds aid big comeback

*Key index ends just slightly lower after big early drop

*Index down 2.8 percent for the week

*Financial sector leads Friday’s fall, down 2.5 percent

*Materials group up 4.9 percent on rising gold price

(Adds official closing numbers, quote, details)

TORONTO, Oct 24 (Reuters) - The Toronto Stock Exchange’s main index closed only slightly lower on Friday after erasing most of the 7.5 percent loss it started the day with, rattled by the recession fears that sparked big selloffs on Asian and European markets and on Wall Street.

Gold mining shares aided Toronto’s comeback as bullion prices rose as safe-haven buying emerged on fears that global stock markets were heading into freefall. The gold-mining subindex was up 8.1 percent. [ID:nL1449620]

Barrick Gold (ABX.TO) rose 8.9 percent to C$25.75, and Agnico-Eagle (AEM.TO) was up 12.8 percent at C$33.86.

“There always is a disconnect between commodity prices and the underlying companies and maybe today (the market) felt the disconnect between gold and the gold companies was far enough that there’s an opportunity there,” said Brian Pow, vice president, research and equity analyst at Acumen Capital Partners, in Calgary, Alberta.

The overall mining-heavy materials sector was up 4.9 percent,

The financial services group fell 2.5 percent, with Manulife Financial (MFC.TO) down 3.9 percent at C$25.00 as several analysts downgraded their share-price targets for the company. [ID:nN24523458]

The oil and gas sector fell 0.2 percent as U.S. crude dropped $3.69 to $64.15 a barrel despite an OPEC decision to cut production in a bid to stem the oil price slide [ID:nN24513540].

EnCana Corp (ECA.TO) rose 1.3 percent to C$55.78.

The key S&P/TSX composite index .GSPTSE closed down 37.26 points, or 0.4 percent, to 9,294.09. Just after the open it tumbled as much as 7.5 percent.

For the week, the TSX is down 2.8 percent. For the year it is down 32.8 percent.

$1=$1.27 Canadian Reporting by Jennifer Kwan; Editing by Peter Galloway

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