TSX extends pullback as investors eye economic data

The facade of the original Toronto Stock Exchange building is seen in Toronto

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index fell for a second straight session on Thursday as recession risk weighed on investor sentiment, but the move was restrained by gains for resource shares as commodity prices climbed.

The Toronto Stock Exchange's S&P/TSX composite index ended down 34.79 points, or 0.2%, at 20,341.44, extending its pullback after notching on Tuesday its highest closing level since Dec. 2.

U.S. stock indexes were also down, posting deeper declines than for the TSX, after data pointing to a tight labor market renewed concerns the Federal Reserve will continue its aggressive path of rate hikes that could lead the economy into a recession.

"The labor market needs to break to allow the Fed to comfortably keep rates on hold," Edward Moya, a senior market analyst at OANDA, said in a note.

Canadian retail sales data, due on Friday, could also impact market sentiment.

"That probably could be affecting (markets) in the near term as they came weaker in the U.S. and are expected to be weaker in Canada," said Kevin Headland, co-chief investment strategist at Manulife Investment Management.

The Toronto market's technology group fell 1.1% and industrials ended nearly 1% lower.

Ballard Power Systems Inc was among the biggest single decliners, falling 10.6%.

Still, the energy sector rose 1.5% as the price of oil settled 1.1% higher at $80.33 a barrel, extending a recent rally built around rising Chinese demand.

The materials group, which includes precious and base metals miners and fertilizer companies, added 0.8% as gold held near a nine-month high.

(Reporting by Fergal Smith; Additional reporting by Shristi Achar A and Johann M Cherian in Bengaluru; Editing by Sriraj Kalluvila and Deepa Babington)