BAY STREET SLIPS AFTER TRADERS FRET ABOUT RITA

S T O C K S

Toronto stocks closed lower yesterday as the market fretted about the economic fallout from the latest hurricane to hit the United States, while a downturn in oil prices hit energy shares.

The Standard & Poor’s/TSX composite index closed down 86.39 points, or 0.8%, at 10,870.75. The index fell as low as 10,846.55 during the session. The blue-chip S&P/TSX 60 index closed down 4.63 points, or 0.8%, at 612.49.

“It’s a very odd day,” said Julie Brough, senior adviser at Morgan Meighen & Associates. “ There’s very significant broad concerns trickling into the economy, particularly in the U.S.”

Ms. Brough said profit-taking may also be a factor as the quarter end draws near.

Hurricane Rita, which is expected to make landfall near Houston, was downgraded to a Category 4 storm, easing fears it would cause as much as damage as Hurricane Katrina. The downgrade pulled crude prices back slightly, with U.S. light crude settling at US$66.50, down 30¢.

All but two of the TSX’s 10 main subindexes ended lower with more than 1% declines in the energy, materials, industrials and technology sectors.

The financial services group and telecoms sectors were alone in positive territory.

The energy group fell 1.6%, led by Western Oil Sands Inc. ( WTO/ TSX), which retreated $1.73, or 5.7%, to $28.77.

Canadian Natural Resources Ltd. (CNQ/TSX)

lost $2.23, or 4%, to US$53.11 while a host of other names shed more than 2%, including Suncor Energy, PetroCanada and Husky Energy.

U.S. stocks rose yesterday after Hurricane Rita was downgraded to a Category 4 storm, easing fears it would cause as much damage as Hurricane Katrina and disrupt oil production to the same extent.

Blue- chip stocks may feel a chill today from Alcoa Inc. (AA/ NYSE), which fell 6% in after-hours trading to US$24.25 after the world’s largest aluminum maker and Dow component warned that its thirdquarter earnings will fall as much as 39% below estimates. Alcoa cited lower aluminum prices, as well as higher costs for energy and raw materials as the reasons for the projected earnings shortfall.

During yesterday’s regular session, investors bought shares of companies that may benefit from rebuilding after the storm, such as heavy-equipment maker Caterpillar Inc. ( CAT/ NYSE), a Dow component, up 1.6% at US$58.

“The stock market is very jittery because of the hurricane,” said Warren Simpson, a managing director at Stephens Capital Management in Little Rock, Ark. “ Any positive news in regards to the storm will push the market up.”

The Dow Jones industrial average was up 44.02 points, or 0.4%, to end at 10,422.05. The S&P 500 rose 4.42 points, or 0.4%, to 1214.62. The technology- laced Nasdaq composite index gained 4.14 points, or 0.2%, to close at 2110.78.

During the regular session, stocks rose as crude oil prices retreated after Hurricane Rita’s downgrade.

“Crude futures are down as investors see the storm going in a less economically vulnerable area, and that’s what has got the market rallying,” said Tom Schrader, managing director at Legg Mason Wood Walker.

Reuters