FINANCIAL SECTOR DIP DRAGS DOWN BAY STREET

Toronto stocks closed slightly lower yesterday as heavilyweighted financial issues handed back a portion of recent gains and outweighed other pockets of strength.

The Standard & Poor’s/TSX composite index fell 24.91 points, or 0.2%, to 11,042.26. The bluechip S&P/TSX 60 index dropped 3.80 points, or 0.6%, to 622.39.

“ The index didn’t do much as a whole but there was a lot of action in there,” said John Kinsey, portfolio manager at Caldwell Securities Ltd. “The financial sector is still a huge part of the market, it’s over 30%, so it kind of dragged down everything else that was having such a good day.”

The financial index dropped 1.3%, while the energy group jumped a market-leading 1.38%. Four of the TSX’s 10 subindexes ended higher.

Shares of Toronto-Dominion Bank ( TD/TSX) dropped $1.23, or 2%, to $57.50 while

Royal Bank of Canada (RY/TSX) fell $1.21, or 1.4%, to $84.90.

Energy stocks helped cushion the market’s fall as fears of fuel shortages were rekindled after the U.S. government said up to 15% of its storm- battered refining capacity could stay shut for weeks.

EnCana Corp. (ECA/TSX) rose $1.70, or 2.6%, to $62.20, while Suncor Energy Inc. (SU/TSX) shares gained $1.72, or 2.48%, to $71.02.

The gold index put together a 1.5% gain and kept the materials sector afloat. Traders expect gold to remain in demand as an inflation hedge as long as oil and gasoline prices are near record highs.

Shares of Barrick Gold Corp. (ABX/TSX)

gained 39¢, or 1%, to $33.74, while Placer Dome Inc. (PDG/TSX) added 25¢, or 1.3%, to $20.12.

U. S. blue-chip stocks edged higher yesterday as a report showing August durable goods orders rose more than expected lifted sentiment, but a rally in crude oil prices kept alive worry about the effect of high fuel costs on the economy.

Apple Computer Inc. (AAPL/NASDAQ) fell 4.4% to $51.08, hurting Nasdaq. The company admitted some of its new iPod nano digital musical players have screens that crack.

The Dow Jones industrial average was up 16.88 points, or 0.2%, to end at 10,473.09 and the S&P 500 was up 1.23 points, or 0.1%, to finish at 1216.89. The Nasdaq composite index was down 1.02 points, or 0.1%, to close at 2115.40.

A Commerce Department report earlier in the day showed orders for durable goods rose a better3.3% last month, up from a revised 5.3% drop in July. Analysts polled by Reuters had forecast an August gain of just 0.8%.

“It’s good news that the durable goods orders were stronger than expected, but those are August numbers and probably don’t carry that much weight,” said Hugh Johnson, chief investment officer of Johnson Illington Advisors. “ The price of oil at these levels still raises questions about the outlook for the economy, even when you get a good durables” report.

Declining shares in the Dow average included big manufacturers like Caterpillar and 3M Co., which are sensitive to rising energy costs.