April 27, 2009 / 8:43 PM / 10 years ago

CANADA STOCKS-Flu fears hit TSX, resources lead drop

* TSX index falls 1.6 pct, breaks four-session rally

* Fears of a global swine flu pandemic grow

* Resource stocks hit hardest (Adds details)

By Ka Yan Ng

TORONTO, April 27 (Reuters) - Toronto’s main stock index fell 1.6 percent on Monday, breaking a four-session rally, as fears of an international swine flu outbreak rattled commodity prices, dampening hopes for an economic recovery.

Resource-related issues, which make up about 40 percent of the overall TSX index, were hit hardest by worries that the already-fragile world economy could be further damaged if a swine flu outbreak in Mexico turns out to be the start of a global pandemic. [ID:nLR259704]

The oil and gas sector dropped 2.4 percent as the price of oil fell more than 2 percent to above $50 a barrel, partly because of worries the flu outbreak could cut back on air travel.

EnCana (ECA.TO) was the top energy player that dragged on the index, falling 2.53 percent to C$53.88.

The materials group lost 2 percent. Even typically safe-haven gold stocks came under pressure as the price of the precious metal slipped as the firmer U.S. dollar prompted profit-taking. [ID:nLR139073]

The S&P/TSX composite index .GSPTSE finished down 154.68 points, or 1.62 percent, at 9,394.80. It had fallen more than 2 percent shortly after market open. Nine of the index’s 10 main sectors ended lower, with the exception of the consumer staples group.

Despite fears of a possible pandemic, the drop in the TSX was not seen as especially worrisome, given that the index has risen sharply in the past seven weeks.

“I would have thought that if there was a real bear tone to the market we’d be more down than this. I still think there’s a healthy undertone to the market,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“In this day and age of volatility, this isn’t a huge down.”

$1=$1.21 Canadian

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