Published On: Fri, May 22nd, 2009

Oil price fall helps fuel big TSX drop

Toronto’s main stock market index fell on Thursday after a two-day rally as a drop in oil prices from six-month highs pressured energy shares.

Oil CLc1 fell to settle at $61.05 a barrel from Wednesday’s half-year high above $62 as signs of job market weakness fanned concerns about economic recovery. [ID:nSIN101873]

The TSX index’s energy sector fell 4.4 percent, with EnCana Corp (ECA.TO) down 5.6 percent at C$58.76. Suncor Energy (SU.TO) fell 3.83 percent to C$34.87.

Toronto also followed world stocks lower as several U.S. economic reports fueled doubts about a quick economic recovery, while Standard & Poor’s revised its UK ratings outlook lower.[ID:nN21281189].

The glum news came a day after the U.S. Federal Reserve, in minutes released from its April policy meeting, cut its outlook for economic growth over the next three years and said a full recovery could take five or six years. [ID:nN21256165]

Financials fell 3.1 percent. Manulife Financial (MFC.TO) retreated 4.6 percent to C$21.39.

“The market has moved way ahead of the economic reality,” said Sal Masionis, stockbroker at Brant Securities.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 282.85 points, or 2.76 percent, at 9,949.59, with all 10 of its main groups lower. In the previous two sessions it had added 4.76 percent.

As well as oil prices, base metal prices were largely weaker amid sullen market sentiment. [ID:nLL341053]

The TSX’s materials group dropped 1.3 percent, with Potash Corp of Saskatchewan Inc (POT.TO) down 4.8 percent at C$124.02. Inmet Mining (IMN.TO)> fell 6.84 percent to C$41.84.