March 27, 2009 / 2:39 PM / 10 years ago

CANADA STOCKS-TSX hit by lower oil, profit-taking

* TSX down 1.6 percent at 8,851.78

* Energy sector down 2.7 percent as oil falls (Adds details, quotes)

By Jennifer Kwan

TORONTO, March 27 (Reuters) - Toronto’s main stock index dropped on Friday morning, pressured lower as the price of oil fell on worries over the economic outlook and hit by profit-taking after the market’s big gains this week.

Heavily weighted issues that contributed to the index’s drop included oil company Canadian Natural Resources (CNQ.TO), which fell 1.9 percent to C$52.20, Royal Bank of Canada (RY.TO), down 1.6 percent at C$36.89, and Manulife Financial (MFC.TO), which dropped 3.8 percent at C$14.82.

The index’s big energy sector was down 2.7 percent as oil dropped to around $52 a barrel on economic worries [ID:nSP390460]. The financial group fell 1.8 percent.

At 10:03 a.m. (1403 GMT), the S&P/TSX composite index .GSPTSE was down 143.72 points, or 1.6 percent, at 8,851.78, with all of its 10 main sectors lower.

The drop comes after the TSX hit 9,018.50 at one point on Thursday its highest level in more than six weeks.

Investors are taking pause after hefty gains logged recently, said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

Ibel added that investors are also grappling with whether the gains — fueled by optimism that stimulus measures may be working to pull the economy out of recession — will ultimately hold.

“Is this a bear market rally or is this going to be the real deal and it starts trading up from here?”

The index’s materials, home to mining and fertilizer companies, fell 1.5 percent as gold and base metals prices sagged. Goldcorp (G.TO) dropped 2.1 percent at C$42.00.

Agrium Inc AGU.TO AGU.N shares fell 2 percent to C$48.01. The Canadian fertilizer maker boosted its hostile takeover offer for CF Industries (CF.N) to about $3.8 billion on Friday by raising the cash component by more than 10 percent. [ID:nN27363496]

$1=$1.24 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway

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