September 23, 2008 / 9:44 PM / in 9 years

Toronto stocks led lower by weak resources

TORONTO (Reuters) - The Toronto Stock Exchange’s main index ended a choppy session lower on Tuesday, dragged down by resource shares that fell with commodity prices, while uncertainty continued to surround the U.S. bailout proposal.

Companies tied to oil, gold and other commodities slid, with the heavyweight energy and materials sectors providing the lion’s share of losses on worries of slowing global growth and demand for resources.

In the oil patch, Canadian Oil Sands Trust was down 4.3 percent at C$41.54, while fertilizer firm Potash Corp of Saskatchewan tumbled 9.7 percent to C$167.80.

Uncertainty over the shape and outcome of the $700 billion financial sector bailout in the United States added volatility to the market as U.S. lawmakers heard testimony on the plan through the day.

But Toronto’s financial sector pushed higher as investors saw optimism in the performance of the Canadian banks compared with their U.S. peers.

“(Canadian banks) did get beat up a bit and I think the feeling is that the Canadian financials may be divorced a bit from what’s happening to U.S. financials,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.

The S&P/TSX composite index closed down 105.44 points, or 0.83 percent, at 12,532.63 with six of its 10 main sectors falling. The index traded in a more than 300-point range from peak to trough during the day.

The financial sector led the upside, rising 2.1 percent, with Canadian Imperial Bank of Commerce up 3 percent at C$62.27, and Bank of Nova Scotia gaining 3.3 percent to C$49.38.

In the United States, officials urged Congress to act swiftly on a plan to buy up bad mortgage debt from financial institutions to ease problems in the credit market.

The plan had helped the Toronto market rally late last week, but concerns over the effectiveness of the proposal, as well as uncertainty over the details, have rattled stocks this week.

“There was a reaction of relief last week when it was announced, but now in the hard light of day people are saying, ‘How are they going to do it and what’s really involved here’?” Kinsey said.

The energy and materials sectors fell 2 percent and 4.7 percent respectively, as oil and gold prices fell, pressured by fears of stalling demand and by a stronger U.S. dollar. Agnico-Eagle Mines was down 2.7 percent at C$66.50, while Husky Energy gave up 3.6 percent to C$41.76.

“I think the bigger issue for Toronto is are we going into a slowdown globally and, if we are, what implication does it have for commodities?” said Paul Harris, portfolio manager at Avenue Investment Management.

Shares of Angiotech Pharmaceuticals dove 39.8 percent to 59 Canadian cents after it canceled a notes offer, prompting worries of liquidity problems.

Market volume was 442 million shares worth C$8.4 billion. Decliners outpaced advancers 973 to 561. The blue chip S&P/TSX 60 index closed down 7.33 points, or 0.96 percent, at 752.32.

In New York, stocks fell on concerns the bailout could be delayed by Congress, sending the Dow Jones industrial average down 161.52 points, or 1.47 percent, to 10,854.17, while the Nasdaq Composite Index slid 25.65 points, or 1.18 percent, to 2,153.33.

($1=$1.04 Canadian)

Editing by Peter Galloway

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