TORONTO (Bloomberg) - Canadian stocks fell for a second day, led by energy and commodity producers, as prices for raw materials dropped on concern that their rally has outpaced the prospects for a recovery in global demand.

Canadian Natural Resources Inc. led the decline among energy shares as oil prices retreated, while Potash Corp. of Saskatchewan Inc. slid for a fourth day on concern prices for the fertiliser will retreat. Banks advanced after the government said retail sales rose more than forecast.

The Standard & Poor's/TSX Composite Index slid 82.97 points, or 0.8 percent, to 10,432.35 at 4.10 p.m. in Toronto. The equity benchmark fell 0.2 percent on Tuesday, after an 8.1 percent, six-day rally on prospects of higher demand for commodities as the world recession eases. Energy and materials producers account for 45 percent of the equity benchmark's value.

"We've had a pretty decent rebound the last couple of weeks," said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ontario. "We're hearing more noise of investors getting antsy, starting to take some money off the table."

Crude oil for September delivery slipped 0.4 percent to $65.38 a barrel at the 2:30 p.m. close on the New York Mercantile Exchange. Canadian Natural, the country's second-largest gas producer, fell 3.2 percent to C$60.57.

Potash Corp., the biggest maker of the fertiliser, fell for a fourth day, losing 3.1 percent to C$97.50. European potash producer K+S AG agreed to sell the crop nutrient for $460 a ton yesterday, in-line with the lower price set by rivals earlier this month. Potash Corp. has tumbled 11 percent since July 6.

Research In Motion Inc., maker of the BlackBerry smartphone, fell two percent to C$80.59, after Apple Inc. said sales of the rival iPhone increased sevenfold to 5.2 million units.

Statistics Canada said yesterday that retail sales rose 1.2 percent in May, more than double the median estimate of economists in a Bloomberg survey.

"The retail sales report is a positive," Mr. Pyle said. "Improvement in the Canadian economy is good news for the banks to the extent that it doesn't cause interest rates to rise. Lending growth is still decent if the economy is holding in."

Royal Bank of Canada rose 0.3 percent to C$49.60.

Sun Life Financial Inc., Canada's third-biggest insurer, advanced 0.9 percent to C$32.99 after saying it's hiring staff to expand its US investment management business.