May 27, 2008 / 9:05 PM / 11 years ago

UPDATE 4-Falling resources take bite out of Toronto stocks

(Adds details, quotes)

*Index ends 1.6 percent lower

*Resource shares decline as commodities tumble

*Financials slide amid quarterly corporate results

By Leah Schnurr

TORONTO, May 27 (Reuters) - Tumbling resource shares led the Toronto Stock Exchange’s main index sharply lower on Tuesday, as energy and materials issues took a beating amid skidding commodity prices.

A stronger U.S. dollar prompted a selloff in oil and gold, important underlying commodities for the Toronto benchmark, which is heavily populated with resource companies.

Energy producers led the way down, falling 3.2 percent. Suncor Energy (SU.TO), sagged C$3.09, or 4.3 percent, to C$68.15, while Canadian Natural Resources (CNQ.TO) lost C$2.81, or 2.8 percent, to C$97.94.

“We might be giving back over $3 in oil, but keep in mind where it’s come from,” said Irwin Michael, portfolio manager at ABC Funds.

“It’s to be expected; you will continue to get significant volatility (and) that will test people’s patience.”

The S&P/TSX composite index .GSPTSE closed down 236.44 points, or 1.6 percent, at 14,522.13 with all but one of its 10 main sectors lower.

The materials group shed 2.5 percent, hurt by a downturn in gold producers and other miners. Inmet Mining IMN.TO slid C$1.82, or 2.6 percent, to C$69.50, and Barrick Gold (ABX.TO) was down C$1.52, or 3.6 percent, at C$40.28.

The financial sector also joined in the slide, declining 1.2 percent as major banks began reporting quarterly results.

Bank of Nova Scotia (BNS.TO) dropped 55 Canadian cents, or 1.1 percent, to C$47.65 after it said second-quarter profit fell amid higher provisions for credit losses and lower capital market revenue. But Scotiabank also upped its dividend to 49 Canadian cents a share from 47 Canadian cents.

Bank of Montreal (BMO.TO) also reported lower profit, stung by a weaker capital markets business, while it warned that its provisions for loan losses would rise. Shares of BMO fell C$1.24, or 2.5 percent, to C$47.76.

“They haven’t really dropped that much in terms of profit, but I think the fact that we’re going a little backward, even though it’s small, is maybe a sign of things to come,” said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc in Vancouver, of the banks’ results.

“The only one expected to report really on the positive side is Toronto-Dominion Bank (TD.TO), but all the others will be in the same league of some shading,” Mastracci added.

Shares of BCE Inc (BCE.TO) were one bright spot on the index, rebounding C$1.09, or 3.2 percent, to C$34.85 after the Supreme Court of Canada said it may hear an appeal of a lower court decision that has sparked fears over the future of its C$34.8 billion ($35.2 billion) buyout.

Technology was the lone sector to finish on the upside, helped by BlackBerry-maker Research In Motion RIM.TO, which gained C$4.62, or 3.6 percent, to C$133.68. The group was 1 percent higher.

Market volume was 395 million shares worth C$8.1 billion. Decliners outpaced advancers 1,023 to 592. The blue chip S&P/TSX 60 index .TSE60 closed down 14.92 points, or 1.69 percent, at 865.83.

On Wall Street, stocks finished higher with help from tech shares, while the drop in oil prices eased worries over consumer and business spending.

The Dow Jones industrial average .DJI was up 68.72 points, or 0.55 percent, at 12,548.35, and the Nasdaq composite index .IXIC rose 36.57 points, or 1.5 percent, to 2,481.24. ($1=$0.99 Canadian) (Editing by Rob Wilson)

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