TORONTO (Bloomberg) - Canadian stocks fell for the first time in three days as oil's decline to a two-week low dragged down energy shares and overshadowed a rally in fertiliser producers.

The Standard & Poor's/Toronto Stock Exchange Composite Index fell 85.57, or 0.6 percent, to 14,728.61. Energy stocks fell 1.2 percent as a group.

Suncor Energy Inc., the world's second-largest tar-sands producer, lost C$2.18, or 3.2 percent, to C$66.60. Canadian Oil Sands Trust, the lead partner in the world's biggest oil-sands producer, fell C$1.55 to C$49.60.

Energy producers make up 32 percent of the benchmark Canadian index, the largest of 10 industries and more than double their weighting in the Standard & Poor's 500 Index. Energy and mining shares have led Canadian stocks to a 6.5 percent advance this year by rising 21 percent and 15 percent, respectively.

"We've had big runs in the mining and energy sectors, so with any negative news one tends to shoot first and ask questions later," said Ian Nakamoto, research director at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.8 billion.

"It's a cooling off of a hot sector, but I don't think it's a trend. It's a pause to refresh."

Crude for July delivery fell $3.51, or 2.8 percent, to $124.25 a barrel on signs that the US will stop cutting interest rates to bolster the US dollar.

The Canadian dollar fell, touching the lowest in more than three weeks.

Potash Corp. of Saskatchewan, the world's biggest fertiliser producer, advanced C$9.93 to C$213.30 after K+S AG, Europe's largest producer, said higher prices will boost 2008 profit by 29 percent. Agrium Inc., North America's third-largest maker of crop nutrients, rose C$2.86 to C$90.11.

Bank of Nova Scotia, Canada's second-biggest lender, climbed for a fifth day, gaining 63 cents to C$50.84 after RBC Capital Markets raised its recommendation on the stock to "sector perform" from "underperform."

Toronto-Dominion Bank, Canada's third-largest bank by assets, was the biggest drag on financial shares after the stock was downgraded to "sector perform" from "outperform" at RBC Capital Markets. Toronto-Dominion fell C$1.05, or 1.5 percent, to C$69.90.

US stocks fell for a second day as growing speculation that Lehman Brothers Holdings Inc. will be forced to raise more capital led a slump in financial shares and a drop in oil prices pushed down energy companies.