May 29, 2008 / 9:21 PM / 11 years ago

UPDATE 4-Toronto stocks drop along with falling resources

(Adds details, quotes)

*Index dragged down by falling resource issues

*Canadian Imperial Bank of Commerce falls as reports loss

*Financials overall provide support

By Leah Schnurr

TORONTO, May 29 (Reuters) - Tumbling resource shares sent the Toronto Stock Exchange’s main index lower on Thursday amid sliding commodity prices, while Canadian Imperial Bank of Commerce (CM.TO) helped weigh the index down after the bank reported another big quarterly loss.

Falling resource companies were responsible for the bulk of the losses, led by energy shares, which were yanked down by a steep drop in oil prices.

Canadian Natural Resources (CNQ.TO) slid C$3.64, or 3.7 percent, to C$95.25, and Suncor Energy (SU.TO) gave up C$2.00, or 2.9 percent, to C$66.89. The group as a whole shed 2.9 percent.

Oil, a key underlying commodity for the resource-heavy TSX, fell more than $4 as strength in the U.S. dollar offset a decline in U.S. stockpiles.

“I’m a little suspect on the market reaction to those inventory numbers because the drawdown of almost 9 million barrels is real supply that’s not there,” said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary.

“I’m wondering how long-lived this pullback in oil will last.”

The S&P/TSX composite index .GSPTSE closed down 111.45 points, or 0.76 percent, at 14,577.17. The energy and materials groups were the only two sectors on the downside.

The materials sector, home to resource shares, was down 2.2 percent, while miners suffered from a drop in prices for gold and other precious metals. Agnico-Eagle Mines (AEM.TO) lost C$2.16, or 3.1 percent, to C$67.96, and Inmet Mining IMN.TO fell C$1.80, or 2.6 percent, to C$68.65.

CIBC shed C$1.39, or 2 percent, to C$69.46. It said on Thursday it lost C$1.1 billion, or C$3.00 a share, in its second quarter on charges of C$2.5 billion for worsening structured credit positions.

But the financial sector as a whole rose 1.3 percent, with all of the other major banks pushing higher. Royal Bank of Canada (RY.TO) added C$1.07, or 2.2 percent, to C$50.53 after it said its second-quarter profit declined due to previously announced writedowns.

National Bank of Canada (NA.TO) rounded out the banking results on Thursday, reporting that its quarterly profit was hurt by losses tied to its asset-backed commercial paper portfolio. Shares of National climbed 68 Canadian cents, or 1.3 percent, to C$53.08.

“It’s good to see the financials rebounding back,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“There’s a general sense that we’re past the worst of this credit cycle, and the banks are coming out relatively unscathed ... the strength of the Canadian banks remains their strong domestic franchise.”

Market volume was 341 million shares worth C$7 billion. Decliners outpaced advancers 922 to 640. The blue chip S&P/TSX 60 index .TSE60 closed down 7.08 points, or 0.81 percent, at 869.61.

In New York, stocks gained as the drop in oil prices calmed concerns over inflation, and an upward revision of U.S. GDP hinted a recession may be avoided.

The Dow Jones industrial average .DJI closed up 52.19 points, or 0.41 percent, at 12,646.22, and the Nasdaq Composite Index .IXIC rose 21.62 points, or 0.87 percent, to 2,508.32. (Editing by Peter Galloway) ($1=$0.99 Canadian)

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