The Toronto Stock Exchange's main index plunged on Friday to its lowest level since March, capping off a losing week as resource stocks fell on retreating oil and metal prices. The S&P/TSX composite index ended the session down 262.21 points, or 2 percent, at 13,096.70. For the week, the index dropped 1.8 percent.
Oil dropped to below $114 a barrel on faltering global demand and rising supply, sliding further from its record high above $147 in July, and pulling the heavily weighted TSX energy subgroup down 3.2 percent. Suncor Energy sagged almost 5 percent.
The materials subgroup was even harder hit, dropping 4.2 percent on falling prices for copper, zinc and particularly gold, which sagged below $800 an ounce for the first time since last December.
The precious metal has fallen 20 percent over the past month, while gold stocks have fallen an average of 28 percent over the same period. Goldcorp retreated 5.4 percent on Friday. John Ing of Toronto investment house Maison Placements, said there were several factors working against gold prices during the session.
"August is a seasonally low period, but today it was the strengthening US dollar and the drop in the oil price. All three factors contributed to gold breaking down technically," he said.
Oil and gold often move in tandem as a higher oil price raises fears of a slowing US economy and thus boosts gold's appeal as a hedge against a weaker US dollar. Among oil and gas producers, Suncor fell C$2.66, or 4.8 percent, to C$53.34, while EnCana Corp dropped C$3.06, or 4.2 percent to C$70.04. The materials sector was weighed down by Goldcorp, which fell C$1.77 to C$31.16 and Eastern Platinum, which dropped 13 Canadian cents, or 8.6 percent to C$1.39.
Uranium producer Cameco Corp dropped C$2.80, or 8.4 percent, to C$30.52 as analysts downgraded the stock on worries of weaker realised uranium prices and flooding at its Cigar Lake mine in Saskatchewan.
Commodities have been hit across the board as worries over the health of the global economy continue to weigh. "Things are kind of all coming to a head, led by the US recession, how deep the housing slowdown is going to go, and how bad this credit thing's going to get. So everybody's nervous," said John Kinsey, a portfolio manager at Caldwell Securities in Toronto.
All told, seven of the 10 TSX subgroups retreated during the session. Shares of Potash Corp fell C$10.23, or 5.4 percent, to C$179.90, as a strike at three of the company's mines moved into its second week with no talks scheduled.
On the economic front, Canada Mortgage and Housing Corp said that housing starts will moderate in 2008 and then slide further in 2009, as demand sags and the costs of carrying a mortgage rise. Market volume was 326.9 million shares, valued at C$5.4 billion. Declining issues outnumbered advancers 901 to 579.
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