July 28, 2008 / 1:23 PM / 11 years ago

Toronto stocks retreat as financials sag

TORONTO (Reuters) - The Toronto Stock Exchange’s main index ended lower on Monday after a late-day retreat as nagging concerns about more fallout from the credit crunch pulled down Bank of Nova Scotia (BNS.TO) and other financials.

The drop may have proven deeper if not for energy and gold shares, which rose as prices for their underlying commodities climbed, in part because of a weaker U.S. dollar. In the oil patch, Canadian Natural Resources (CNQ.TO) rose 1.3 percent, while among the miners, Goldcorp (G.TO) added 2.4 percent.

After climbing by more than 1 percent in the morning, the index reversed course, yanked down by banking stocks tracking losses in their U.S. counterparts.

Fresh worries of more credit losses stung the sector after U.S. regulators on Friday took over two small banks that had failed. In Toronto, Bank of Nova Scotia gave up 2.3 percent.

“There’s no doubt in my mind there will be more losses and more surprises,” said Michael Sprung, president at Sprung & Co. Investment Counsel.

But Sprung added, “In Canada, we’re going to be in much better shape than south of the border, and I think, if anything, the Canadian financial institutions are overly reacting to the problems now.”

The S&P/TSX composite index .GSPTSE closed down 74.85 points, or 0.56 percent, at 13,303.96 with six of its 10 main sectors pushing lower.

The financials sagged 2.2 percent, with Royal Bank of Canada (RY.TO) down C$1.20, or 2.7 percent, at C$43.72, and Scotiabank losing C$1.14 to C$47.82.

The heavyweight energy sector maintained its lead on the upside as oil prices rose after militant attacks in Nigeria hurt that country’s oil production.

The oil and gas group was up 0.8 percent, with Canadian Oil Sands Trust COS_u.TO gaining C$1.39, or 2.9 percent, to C$48.91, while Canadian Natural Resources rose C$1.02 to


Materials added 0.5 percent, with help from its gold producers, including Barrick Gold (ABX.TO), which rose 75 Canadian cents, or 1.7 percent, to C$45.44. Goldcorp was up 97 Canadian cents at C$41.97.

Biovail Corp BVF.TO shed C$1.21, or 10.8 percent, to C$10.05 after founder Eugene Melnyk said he was giving up on his plan to oust the company’s board of directors and elect his own team at a shareholders meeting next month.

Potash Corp of Saskatchewan POT.TO was off C$3.47, or 1.7 percent, to C$202.42 while unionized workers picketed outside the company’s Cory mine, slowing operations there.

After the bell, a union spokesman said that Potash Corp had asked the union to resume bargaining, and talks were set to resume at 3 p.m. local time (2100 GMT).

Angiotech Pharmaceuticals ANP.TO was down 15 Canadian cents, or 6.4 percent, at C$2.19 after it said its second-quarter loss widened while royalty revenues for its drug-coated stents fell.

Market volume was 297 million shares worth C$5.9 billion. Decliners outpaced advancers 850 to 655. The blue chip S&P/TSX 60 index .TSE60 closed down 5.96 points, or 0.74 percent, at 794.38.

In New York, stocks fell on worries of more credit and housing market turmoil, while investors took in a mixed bag of quarterly results.

The Dow Jones industrial average .DJI closed down 239.61 points, or 2.11 percent, at 11,131.08, and the Nasdaq Composite Index .IXIC fell 46.31 points, or 2 percent, to 2,264.22.

($1=$1.02 Canadian)

Editing by Frank McGurty

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