November 25, 2008 / 4:33 PM / 10 years ago

CANADA STOCKS-Resources drag Toronto index lower

* Energy sector starts to track oil price decline

* Bank of Montreal profit up, stock off early highs

* Several miners suspend ops, sending shares lower

* U.S. Fed to buy housing-related securities

TORONTO, Nov 25 (Reuters) - The Toronto Stock Exchange’s main index eased on Tuesday in choppy trading as the energy group caught up with a decline in the price of oil and as enthusiasm dissipated for a U.S. Federal Reserve aid package designed to help bolster consumer lending.

The Fed’s package includes a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to buy consumer debt securities. [ID:nN25255949]

The news temporarily outweighed the effect of sliding oil prices, which often drive the resource-heavy TSX’s direction.

Energy issues had a delayed reaction to the drop in oil prices. The sector was down 1.4 percent, as the crude fell to nearly $51 a barrel, unraveling the previous session’s rally of nearly 10 percent. [ID:nSP128607]

“Commodities are bouncing around. Oil is taking a bit of breather, pulling back, and gold is flattening out. These are two things that basically lead the Canadian market,” said Sal Masionis, a stockbroker at Brant Securities.

“The big thing in the States was more money thrown in for liquidity purposes. That helped the whole tone of the market.”

Shortly after 11:15 a.m. (1615 GMT), the S&P/TSX composite index .GSPTSE was down 1.11 percent, or 93.64 points, at 8,347.23. Six of its 10 main groups were higher, while the heavily weighted energy and materials sectors were the main drag.

The materials group dropped 4.3 percent, due in part to an easing gold price as a firmer U.S. dollar and softer oil prices prompted profit-taking after bullion pushed near six-week highs. [ID:nLP645887]

Several miners announced plans to scuttle deals or suspend operations, including BHP Billiton (BHP.AX), which abandoned its hostile $66 billion takeover bid for Rio Tinto. (RIO.L)

In Canada, Sherritt International (S.TO) fell more than 6 percent to C$1.80 as it said it is revising the construction plan for its Ambatovy nickel project in Madagascar to cut costs. [ID:nWNAB7320]

Meanwhile smaller companies Denison Mines (DML.TO) and Vaaldiam Resources VAA.TO also announced suspension of operations, pushing their stocks down 24 percent and 20 percent, respectively.

Financials were flat as Bank of Montreal (BMO.TO) said its quarterly profit rose, helped by tax recoveries and new accounting rules that enabled it to avoid some writedowns that would have reduced income in its BMO Capital Markets unit. [ID:nN25284406]

Bank of Montreal rose 1.4 percent to C$34.60, after earlier claiming a spot as top net gainer.

But Toronto-Dominion Bank (TD.TO) was among the top net loss leaders, down 8.2 percent at C$39.39, after it said late Monday it sold common shares worth C$1.2 billion in order to reassure investors about its capital strength. [ID:nN24527304]

$1=$1.22 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson

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