TORONTO (Bloomberg) - Candian stocks fell, driving the benchmark gauge to the lowest level since July 21, as unemployment claims unexpectedly rose in the US and crude oil slipped below $77 a barrel for the first time this month.

Suncor Energy Inc., the country's largest oil and gas producer, slumped 1.2 percent as crude retreated for a third day. Canadian Natural Resources Ltd., the nation's second-largest oil producer by market value, tumbled 2.4 percent. Barrick Gold Corp., the world's largest producer of the metal, gained 1.7 percent as gold advanced on signs the global economic recovery is slowing.

The Standard & Poor's/TSX Composite Index lost 58.61 points, or 0.5 percent, to 11,523.60 in Toronto. Among S&P/TSX stocks, 125 fell, 100 rose and four were unchanged.

"Jobless claims builds on the negative side of things," said Greg Eckel, who helps manage about C$900 million ($850 million) at Morgan Meighen & Associates Ltd. in Toronto.

"Two of the big factors that are required for the recovery are jobs and the housing sector. It's a carrying on of what's bothered the market in the last one or two days. It's very volatile and willing to move on each and every piece of news out."

This week, the US Federal Reserve said it will reinvest principal payments on mortgage securities it owns into Treasuries in its first attempt to boost growth since March 2009, casting doubt on the strength of the economic recovery in Canada's largest trading partner.

The US trade deficit and weekly initial jobless claims were higher than expected. The S&P/TSX has declined 1.9 percent this year as U.S. unemployment above nine percent reduced the impact of stronger- than-forecast corporate earnings. The Thomson Reuters/Jefferies CRB Index of commodities dropped 5.1 percent.

Energy and raw-materials companies make up 46 percent of Canadian stocks by market value. More Americans than expected filed applications for unemployment insurance last week, signaling lay-offs stepped up as the economy slowed. Initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid- February, US Labor Department figures showed yesterday.