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TSX drops sharply on Korea tensions

TORONTO (Reuters) - Toronto's main stock index ended sharply lower yesterday as tensions in the Korean peninsula and euro zone debt concerns pushed down heavily weighted commodity-linked shares.

Toronto stocks followed global equities lower, with energy, down 1.6 percent, among the hardest-hit groups on the resource-heavy index.

Key decliners included Suncor Energy, off 2.7 percent at C$33.95, and Canadian Natural Resources, down 2.2 percent at C$39.10. Encana Corp. dropped 1.6 percent to C$28.50.

Investor sentiment was shaken as North Korea fired dozens of artillery shells at a South Korean island in one of the heaviest attacks on its neighbour since the Korean War ended in 1953.

The incident hit global financial markets that were already unnerved by fears that a rescue package for Ireland might not stop problems from spreading to other indebted euro zone countries.

"You now have a new variable added to the mix and that's geopolitical risk. That's on account of the news of some skirmishes between North and South Korea," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

"Anything that is negative for global growth has a direct impact on commodity prices and, by extension, the TSX."

The Toronto Stock Exchange's S&P/TSX composite index ended the day down 135.26 points, or 1.05 percent, at 12,793.75.

Nine of the TSX's 10 main sectors were lower. Utilities managed to eke out a 0.2 percent gain.

Gold-miners were among the few issues on the rise as investors flocked to the safe-haven precious metal, said Mr. Picardo.

That helped limit the fall of 0.6 percent in the material group, which came under pressure from weak base metal prices, including copper. Barrick Gold rose 1.7 percent to C$51.95, while Agnico-Eagle rose 0.1 percent to C$80.30.

Diversified miner Teck Resources skidded four percent to C$48.82.