June 1 (Reuters) - Canada's main stock index closed in the red on Monday, bogged down by losses in heavyweight financials and mining stocks, as signs of escalation in the Middle East conflict hit risk appetite and sent oil prices surging.
The Toronto Stock Exchange's S&P/TSX Composite Index was down 0.1% at 34,734.89 points.
o Materials dropped 1.6%, with gold miner Equinox Gold leading losses as bullion prices dropped about 1%. Orla Mining fell 8% after it temporarily halted operations at its Camino Rojo gold mine in Zacatecas, Mexico, due to a union stoppage and blockade.
o Financials shed 1.3%. Canadian Imperial Bank of Commerce fell 2.5% after Scotiabank downgraded its rating to "sector perform" from "sector outperform."
o Information technology jumped 6%, with software-related firm Coveo leading gains, in line with a rally of software stocks on Wall Street.
o Energy climbed 2%, as crude oil prices jumped after Iran's Tasnim news agency reported that Tehran is halting indirect negotiations with the U.S. and plans are being made for Iranian forces and their allies to completely block the Strait of Hormuz and take action elsewhere.
o "The dispersion today seems to be quite high. The market, especially the financials, is reacting to weak economics here in Canada. Energy prices are reacting to what's going on in the Middle East, so you have a bit of push, a bit of pull today," Verecan Capital Management CIO Josh Sheluk said.
o Roughly two-thirds of the TSX is made up of energy, materials, and financial stocks.
o The benchmark TSX clocked a second straight monthly gain in May, with the index hovering near its all-time highs despite Monday's losses.
o Meanwhile, data showed Canada's manufacturing sector expanded for a second straight month in May as the potential for higher prices and product shortages due to the Middle East war likely boosted client demand.
(Reporting by Shashwat Chauhan in Bengaluru and Nivedita Balu in Toronto; Editing by Sahal Muhammed)
