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UPDATE 1-CIBC World Markets cuts S&P/TSX year-end target

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Sept 10 (Reuters) - CIBC World Markets lowered year-end target for the S&P/TSX composite index .GSPTSE, the Toronto Stock Exchange's main index, on soft global growth prospects and selling pressure on the markets.

"With Europe in recession, and Japan and the U.S. economy in borderline status, world growth outlook is the weakest in years," CIBC World Markets chief economist Jeff Rubin said.

Rubin cut his year-end target for the TSX composite to 13,000 from 14,300 and 2009 target to 14,000 from 15,250.

"Our targets imply a slightly negative annual total return from the TSX this year but a more typical return next year." Rubin said in his latest Canadian Portfolio Strategy Outlook Report.

He said his global GDP forecast of 3.7 percent this year and 3.9 percent for the next year still implied a stronger performance than the 2 percent to 2.5 percent rise that sparked the last two protracted commodity recessions in 1998 and 2001.

On oil prices, Rubin expects most of the recent decline to be reversed over the next six months, as an above 5 percent growth in OPEC and China props up demand for crude.

Rubin, however, cut his target for crude by $10 per barrel to $115 for the current year and by $20 per barrel to $130 for 2009 as he expects the oil prices to lag his earlier targets.

The economist remained "index-weight" on overall equity market exposure, but scaled back his "overweight" position on energy stocks. He assigned a full "market weight" position to the financials.

Rubin said the global financial system still faces considerable headwinds, but some of the worst fears are being overcome.

"The (U.S.) Treasury's confidence-boosting steps to shore up Freddie and Fannie sooner rather than later will help Canadian players with U.S. mortgage assets." said Rubin. (Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Anil D'Silva)

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