By Leah Schnurr
Reuters
Tuesday, August 29, 2006

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TORONTO (Reuters) - The Toronto Stock Exchange's main index ended more than 100 points lower on Tuesday, trimming earlier losses, as energy and financial issues sagged after commodity prices continued to retreat.

Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, “There’s a need for investors to stay focused, and this is one of the reasons why we get this up and down sometimes.”

The Toronto Stock Exchange S&P/TSX composite index closed down 106.87 points, or 0.9 percent, at 12,060.48 after falling as low as 12,002.27 during the session.

"There's a need for investors to stay focused, and this is one of the reasons why we get this up and down sometimes. They just don't know which direction is the one to take," said Adrian Mastracci, investment counsel and president at KCM Wealth Management Inc. in Vancouver

"They're looking for a direction, they're looking for leadership somewhere, but they're not finding it," he added.

Economic reports out of the United States also affected the stock market. A report in the morning showed that U.S. consumer confidence had slipped more than expected to a nine-month low in August, fueling fears of an economic slowdown.

In the afternoon, the index rallied with help from the minutes of the U.S. Federal Reserve's policy meeting, which showed most officials expect inflation to ease in the months to come.

"The Fed minutes are out and generally interpreted a little more positive, so the markets are rallying off the back of that," said Neil Andrew, an associate portfolio manager at Leeward Hedge Funds in Toronto.

Overall, all but one of the TSX index's 10 main groups were lower.

Energy issues dropped 1.6 percent as the price of crude oil fell 1.3 percent to below $70 a barrel, extending Monday's slide as fears faded that Tropical Storm Ernesto would disrupt oil and gas production in the Gulf of Mexico.

Shares in EnCana Corp. fell C$1.89, or 3 percent, to C$59.27, while Nexen Inc. dropped C$1.43, or 2.2 percent, to C$64.32.

Financials finished 1 percent lower, despite a strong earnings report from Bank of Nova Scotia . Scotiabank posted a 19 percent rise third-quarter earnings, continuing the trend set by banks last week.

Scotiabank's shares were down C$1.30, or 2.7 percent, at C$47.63. Royal Bank of Canada dipped 66 Canadian cents, or 1.3 percent, to C$49.24.

Mining issues, part of the materials subgroup, slid 1.3 percent after Inco Ltd. said it backed a friendly takeover offer from U.S.-based Phelps Dodge Corp. and urged shareholders to reject a hostile all-cash bid from Brazilian iron ore giant CVRD .

Inco shares fell 50 Canadian cents, or 0.6 percent, to C$85.60. Kinross Gold was down 13 Canadian cents or 0.9 percent, to C$14.72.

Market volume was 319 million shares worth C$7.2 billion. Decliners outpaced advancers 977 to 563. The blue chip S&P/TSX 60 index closed 9.07 points lower, or 1.3 percent, at 681.93.

Wall Street also felt the effect of the day's data, as U.S. stocks were lifted by the Fed's minutes.

The Dow Jones industrial average gained 17.93 points, or 0.16 percent, to end at 11,369.94. The Nasdaq composite index climbed 11.60 points, or 0.54 percent, to close at 2,172.30.

($1=$1.11 Canadian)

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