The economic and market uncertainty created by the terrorist attacks in the United States could put a further dent in already lacklustre sales in Canadian mutual funds, industry officials say.

Chris Hodgson, managing director at mutual fund direct seller Altamira Investment Services Inc. of Toronto, said "sales are slowing but there is certainly no panic," and there has been "nothing significant" in terms of redemptions.

"We think most people are still trying to digest the magnitude of what has occurred over the last three days," Mr. Hodgson said yesterday.

The Investment Funds Institute of Canada, the national fund industry body, suspended trading in all funds on Tuesday after terrorists hijacked aircraft and struck the World Trade Center in New York and the Pentagon in Washington.

Trading resumed yesterday in many funds after Canadian and non-U.S. markets reopened for business. But investors could not buy or sell funds invested in U.S. securities because American markets are closed until Monday.

Canadian regulators also agreed that fund companies could choose not to permit trading in Canadian funds with more than 5 per cent in U.S. stocks.

William Holland, chief executive officer of Toronto-based C.I. Fund Management Inc., said he expects this week's events to make investors less inclined to put more cash in mutual funds -- particularly those investing in stocks.

"Business was already slow" for funds other than those investing in money markets, Mr. Holland said. "[Tuesday's tragedy] adds one more level of uncertainty to what's been a difficult market."

In July, 70 per cent of the $1.7-billion in mutual fund net sales came from money market funds -- mainly parking lots for cash.

Mr. Holland is not expecting large-scale redemptions of funds imminently.

"Rather than having phones buzzing off the hook, these have been the two quietest days of the year. I just think people are glued to their TVs.

"It's more likely that you face redemptions six months after an event," he said, referring to the fact that major fund redemptions didn't occur after the 1987 stock market crash until the spring of 1988.

Dwayne Dregger, vice-president of communications for AIM Funds Management Inc. of Toronto, said Tuesday's events could slow down sales of mutual funds, but he sees it as a continuation of what has occurred for the past 18 months.

"Our company and certainly the whole industry has seen slowing sales of long-term assets [stock funds] because of market conditions, and that is bound to continue," Mr. Dregger said.

He expects "fairly modest redemptions" at his firm based on some of the market activity so far. The Toronto Stock Exchange 300-stock composite index rose 53.50 points or 0.76 per cent yesterday in heavy volume -- the first day of trading since Tuesday.

James Gauthier, a fund analyst at FundMonitor.com Corp. of Toronto, said he expects the uncertainty created by terrorist attacks in the United States "is definitely not going to help fund sales.

"We are going to probably see a continuation of money into money market funds until the economy starts showing some signs of life," Mr. Gauthier added.

Terry Stone, chief executive officer of Toronto-based ClaringtonFunds Inc., said he does not expect major redemptions but was unsure about the impact on sales.

"It depends how the market does act in the next week or so," Mr. Stone said.

"One scenario could be the market going down significantly, and the smart money coming in from the sidelines because of the bargains.

"If [the market] doesn't start off low and go down, then that may even also be positive because it will reassure people that the end of the world is not happening."