TSX pulled down by oil, but gold shines

By Ka Yan Ng
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TORONTO (Reuters) - Toronto's main stock index finished more than 2 percent lower on Tuesday, hurt by lower oil prices and worries about toxic assets in the global banking industry.

Oil prices fell more than 3 percent to nearly $49 a barrel and pulled down the energy group 2.7 percent. Shares of EnCana Corp , one of the biggest drags on the overall index, were down 3.7 percent at C$52.84, while Canadian Natural Resources was off 3.8 percent at C$51.47.

Worries about the health of the global banking system were raised anew on Tuesday as the market focused on what may be revealed in upcoming earnings statements.

Toronto's financial sector was down 2.7 percent, pressured also by news that the International Monetary Fund was to soon forecast that toxic assets racked up by banks and insurers could hit $4 trillion.

Royal Bank of Canada was off 2.1 percent at C$37.40, while Bank of Nova Scotia dropped 2.97 percent to C$30.76.

The S&P/TSX composite index finished down 191.42 points, or 2.12 percent, at 8,824.75. All 10 of the TSX's main sectors were lower.

"It's tough for the Canadian market to have a good day when oil and commodities are down and (there are) increased worries in the financial sector," said Michael Sprung, president at Sprung & Co. Investment Counsel.

The sharp declines in financials and energy were partly offset by rebounding gold-mining issues.

Shares of Goldcorp , the main lift on the index, gained 0.8 percent to C$37.70, while Barrick Gold rose 0.56 percent to C$35.81. The materials group as a whole ended 1.37 percent lower.

The TSX has fallen in the past three sessions after four weeks of gains. In early March it plunged its lowest level in more than five years.

"It's not a drastic selloff, it's still within a five-day range. It's jitters and nervousness ahead of earnings. Alcoa will give the head start tonight," said Francis Campeau, a broker at MF Global Canada, in Montreal.

Nervousness ahead of release of aluminum producer Alcoa's results on Tuesday, which traditionally kicks off the start of the U.S. earnings parade, also contributed to the general malaise on equity markets, which were bracing for more gloom after the worst fourth-quarter earnings season on record.

Alcoa's results could set the stage for sentiment on equity markets in the weeks ahead. The company reported a second consecutive quarterly loss after the market close on Tuesday.

Canadian jobs figures this Thursday could also strain sentiment if data shows another month of severe job losses.

The blue-chip S&P/TSX 60 closed 11.57 points lower, or 2.11 percent, at 537.18.

($1=$1.24 Canadian)

(Reporting by Ka Yan Ng; editing by Peter Galloway)

Johnathan Vrozos