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TSX drops, hit by gold/oil declines

TORONTO (Reuters) - Toronto's main stock market index ended a five-session stretch of gains yesterday as a drop in gold and oil prices pulled down a host of resource-related stocks, including Canadian Natural Resources and Suncor Energy.

The price of crude oil fell from 15-month highs to below $83 a barrel, clipping a 10-day rally, as signs of a tighter monetary policy in China sparked concern about demand in the world's second largest energy consumer.

Canadian Natural Resources, down 2.3 percent at C$74.48, and Suncor, off 1.1 percent at C$38.82, played the biggest roles of any stocks in leading the market lower.

"Commodity prices are off so our producers are down as well. That's largely being driven by news from China that it might be tightening credit," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

The Toronto Stock Exchange's S&P/TSX composite index closed down 57.03 points, or 0.48 percent, at 11,887.51.

Mr. Picardo said the market's intense focus on North American jobs data for December, due today, also prompted some investors to take profits ahead of time.

The Canadian dollar fell against the US currency yesterday as commodity prices weakened in response to possible indications from China that it plans to cool its economy to keep a lid on inflation.

A stronger US dollar on the back of weaker than expected data out of the euro zone and on comments by Japan's new finance minister that he wanted a weaker yen also weighed on the Canadian currency.

The Canadian dollar finished the North American session at C$1.0350 to the US dollar, or 96.62 US cents, down from Wednesday's finish of C$1.0325 to the US dollar, or 96.85 US cents.

The price of oil, a key Canadian export, slipped to below $83 a barrel after a 10-day rally, on worries that demand would ease if China took more substantial steps to remove excess liquidity from its system in order to keep growth in check.