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TSX closes lower on investor caution

TORONTO (Reuters) - Toronto's main stock market index ended slightly lower yesterday as investors grew cautious after two straight sessions of gains and a stronger greenback pressured commodity prices, weighing on miners.

First Quantum Minerals topped the list of influential movers on the downside, dropping eight percent to C$75.05, while Teck Resources fell 2.2 percent to C$36.86, as the price of base metals pulled back.

Copper prices tumbled to two-and-a-half month lows as gains by the US dollar and concerns over Chinese monetary tightening and European credit problems reflected an uncertain outlook for the global economic recovery. Gold prices were also weaker. The Toronto Stock Exchange's S&P/TSX composite index finished the day down 17.88 points, or 0.16 percent, at 11,390.46.

After two days of gains in which the TSX composite added two percent, it was not surprising to see a pull-back, said Rick Meslin, head of Canadian equities at UBS.

"It's really kind of like a bit of a battle with people taking risk off and balanced by people who are looking for opportunities," he said.

On the upside, were heavyweights Potash Corp of Saskatchewan Inc., which added 3.9 percent to C$114.77, and Research In Motion, which climbed 3.5 percent to C$72.

Canada's currency dropped after hitting a one-week high against the US dollar yesterday as fresh credit worries that hit smaller euro zone countries curbed risk appetite.

After investors digested news that the European Commission backed a Greek deficit-cutting plan, as expected, long-term concerns emerged that Greece is not an isolated case.

A sell-off in peripheral euro zone government bonds from the likes of Italy, Portugal and Spain put pressure on the euro itself, boosting the dollar as a safe-haven asset, and pushing other currencies down.