REFILE-UPDATE 3-Toronto stocks end flat as financials weigh

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By Leah Schnurr

TORONTO, May 5 (Reuters) - The Toronto Stock Exchange's main index ended little changed on Monday, pressured by a selloff in banking issues that countered a lift from surging commodity prices.

The tumbling banking sector led the downside, caught up in fresh worries from south of the border after a brokerage said Bank of America (BAC.N) was likely to renegotiate, or possibly walk away from, its deal to buy beleaguered mortgage lender Countrywide Financial CFC.N.

The development resurrected worries over the health of the U.S. financial sector that had been partly calmed when Bank of America stepped in to buy Countrywide, said Sal Masionis, a stockbroker at Brant Securities.

"These guys made an offer, and now they're renegotiating it, so ... obviously a deal is not a deal," said Masionis.

On Bay Street, Canadian Imperial Bank of Commerce (CM.TO) was down C$2.37, or 3.1 percent, at C$73.93, while Royal Bank of Canada (RY.TO) fell C$1.38, or 2.8 percent, to C$48.70. Overall, the sector lost 2.2 percent.

The S&P/TSX composite index .GSPTSE closed down 5.94 points, or 0.04 percent, at 14,274.34.

The energy and materials sectors were the only groups to end higher, helping to prop up the broader index for much of the day as crude oil prices scaled fresh heights.

The oil and gas group rose 1.4 percent, with Suncor Energy (SU.TO) up C$2.85, or 2.5 percent, at C$116.50, and Petro-Canada (PCA.TO) gaining C$1.06, or 2.1 percent, to C$52.47.

The price of crude, a key underlying commodity for the resource-heavy TSX, jumped $3.65 to $119.97 a barrel after earlier breaching the $120 mark, lifted by a weak U.S. dollar and worries over supply.

Also in resources, Potash Corp of Saskatchewan (POT.TO) added C$5.55, or 2.9 percent, to C$196.36, while Barrick Gold (ABX.TO) advanced C$1.10, or 2.9 percent, to C$39.41.

The materials sector pushed up 2.4 percent, and its smaller gold producers subindex added 1.9 percent, helped by rising bullion prices.

Goldcorp (G.TO) pushed up 35 Canadian cents, or 1 percent, to C$37.16 after it reported a jump in first-quarter profit, boosted by strong gold prices and the sale of its Silver Wheaton (SLW.TO) stake.

Analysts said the Toronto benchmark was also hurt by profit-taking on the heels of a strong three-day runup that saw it add on more than 3 percent.

"The stock market in general has had a nice bounce, both in Canada and the States, and specifically the financial sector had a bit of a recovery," said Levente Mady, a broker at MF Global Canada in Vancouver.