March 27, 2009 / 8:50 PM / 10 years ago

CANADA STOCKS-TSX stumbles on oil drop but salvages weekly gain

* TSX falls 174.44 points to 8,821.06.

* Lower oil and commodity prices drag

* Third straight week of TSX gains (Adds details, comments and official numbers)

By Frank Pingue

TORONTO, March 27 (Reuters) - Toronto’s main stock index ended lower on Friday as a drop in commodity prices shook the resource-heavy market, but the index still rose on the week, marking a third straight week of gains.

A report that showed OPEC produced more oil than it targeted in March contributed to a slide in crude and sparked a selloff in energy shares, which make up more than 20 percent of the main index. [ID:nSP390460]

Shares of EnCana Corp (ECA.TO), the biggest drag on the index, fell 5 percent to C$52, while fellow oil company Canadian Natural Resources (CNQ.TO) fell 3.2 percent to C$51.49.

The S&P/TSX composite index .GSPTSE fell 174.44 points, or 1.94 percent, to close at 8,821.06.

For the week the TSX finished up 3.7 percent, due largely to a 450-point rally at the start the week. It marked the index’s third straight weekly gain.

Unlike some selloffs earlier this year, Friday’s fall did not generate much concern among analysts, who said the slide was relatively contained.

“In the decline today there didn’t seem to be a sense of panic and that’s a good thing,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

“We continue to see a little bit of optimism come back into the market, but by the same token the situation is still quite fluid, so it’s only natural to expect a little bit of profit-taking at the end of such a strong week.”

All 10 sectors of the TSX ended down, with a 3 percent drop in the energy group and 1.95 percent decline by the materials group among the key drags.

The materials sector, home to mining companies, fell as gold prices came under pressure from a stronger U.S. greenback and reduced safe-haven demand given recent steps to stem the economic crisis.

Barrick Gold Corp (ABX.TO) shares fell 2.65 percent to C$39.70, while shares of Goldcorp (G.TO) dropped 2.8 percent to C$41.68.

With the third straight week of gains for the TSX now in the books, investors are looking ahead to next week when the index has a chance to record its first higher monthly close since August.

“It’s quite likely that we may be in the early stages of a turnaround in market sentiment so I think investors should expect to see these sort of (higher) moves in the market for the next little while,” said Picardo.

$1=$1.24 Canadian Editing by Jeffrey Hodgson

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