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TSX extends losses, dragged down by energy, mining

Canada\'s main stock index is falling today, hurt by profit taking on Canadian drugmaker Valeant Pharmaceuticals International Inc and continued declines in the key financials, materials and energy groups.

TORONTO – The Toronto stock exchange closed lower Friday, dragged down by the energy and mining sectors, while the Canadian dollar crept marginally higher.

The S&P/TSX composite index fell 79.13 points to close at 14,186.24.

\”Commodity stocks are simply not the place to be right now,\” said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto.

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The September agreement for crude oil fell 31 cents to US$48.14, while the August gas contract dropped four cents at US$2.776 and also the August gold contract fell US$8.60 at US$1,085.50.

The energy sector of the TSX lost a lot more than two per cent, while the metals and mining sector declined 1.57 percent.

Meanwhile, the loonie, which has been flirting with its lowest level since 2004, rose 0.03 of the cent at 76.72 cents US.

\”That\’s probably nearly as good a reflection as anything when it comes to what foreigners consider our markets,\” Nakamoto said.

In the U.S., markets closed lower amid disappointing quarterly earnings results and weak economic data. A housing report indicated that sales of recent single-family homes dropped to the slowest pace in seven months.

The Dow Jones industrial average lost 163.39 points at 17,568.53, while the Nasdaq dropped 57.78 points at 5,088.63 and also the S&P 500 gave back 22.50 points at 2,079.65.

However, Nakamoto noted that U.S. financial markets are still faring much better than those north of the border.

\”Canada doesn\’t appear to be much in favour these days,\” he said. \”The U.S. is down today, but the U.S. is close to an all-time high. We\’re nowhere near that.\”

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A slew of Canadian information mill set to report their second-quarter results next week, including oilpatch companies Suncor, Cenovus, Imperial Oil, Enbridge and TransCanada.

Oil companies are expected to report weak results because of the slump in the price of crude, which fell below the US$50 a barrel mark in recent days.

The outlook isn\’t great for mining companies either, said Nakamoto, as prices of gold along with other commodities happen to be weak.

Miners Agnico-Eagle Mines, Kinross Gold and Goldcorp Inc. will report their results next week.

\”Anything that touches natural resources ought to be prepared for weakness in earnings,\” Nakamoto said.

Earnings from Canada\’s big banks, which don\’t report until later in August, ought to be \”okay, but nothing to write home about,\” he added, noting their wealth management and capital markets divisions should compensate somewhat for a slowdown in consumer borrowing and pressures on their own net interest margins stemming from recent rate cuts in the central bank.