TSX falls as energy stocks, banks weigh; adds 1.7 percent on week

By Alastair Sharp

TORONTO (Reuters) - Canada's benchmark stock index fell on Friday after a strong rally earlier this week, with energy stocks slipping on slumping oil prices on growing skepticism that a deal to curb output could be struck next week.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended down 99.25 points, or 0.67 percent, at 14,697.93. Still, it notched a 1.7 percent weekly gain.

"We had a number of good days in a row and the TSX is on absolute fire this year. It can't go up every day," said Barry Schwartz, portfolio manager at Baskin Financial Services.

Eight of the index's 10 main groups ended lower.

The energy group lost 1.7 percent overall, with major producer Canadian Natural Resources down 2.4 percent at C$39.03.

U.S. crude prices settled down 4 percent on signs Saudi Arabia and arch rival Iran were making little progress toward a preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production. [O/R]

Banks were also among the biggest drags, after the financial sector jumped in the prior two sessions on news that the U.S. Federal Reserve had left the door open for an interest rate hike in December even as it indicated less aggressive credit tightening in 2017 and 2018.

Royal Bank of Canada (Toronto:RY.TO - News) fell 0.6 percent to C$81.40 and Bank of Nova Scotia (Toronto:BNS.TO - News) lost 0.9 percent to C$70.47.

The financials group, which accounts for 35 percent of the index's weight, slipped 0.5 percent overall.

Seven Generations Energy Ltd (Toronto:VII.TO - News) Ltd fell 4.9 percent to C$30.16 after Paramount Resources Ltd (Toronto:POU.TO - News) said it had sold 24.7 million shares of the oil and natural gas developer.

Teck Resources Ltd (TCKb.TO) jumped 7.5 percent to C$23.95. The stock recently hit a two-year high, boosted by a rally in prices for metallurgical coal.

Baskin's Schwartz said his clients were starting to fret about the U.S. election and what the possible outcomes might mean for Canadian investors.

"What happens if Trump, what happens if Clinton gets elected, how does that impact what sectors, how do we take this as Canadians," he said. "Trump is a wildcard, that's why people are very concerned."

Canada's annual inflation rate in August dipped to a 10-month low and retail sales unexpectedly fell in July, disappointing markets and reviving talk that the Bank of Canada was more inclined to ease monetary policy than tighten.

(Reporting by Alastair Sharp; Editing by Meredith Mazzilli and Richard Chang)