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TORONTO (Reuters) - The Toronto Stock Exchange's main index ended lower on Tuesday after it reversed direction in the afternoon as fears of more fallout from the battered U.S. subprime mortgage market undercut gains by gold-mining issues.
After jumping more than 100 points earlier in the day, the index slumped for the third session in a row amid persistent worries over the health of the U.S. economy.
Jitters over the prospect of more bad news out of the subprime mortgage market weighed on the index even after U.S. mortgage lender Countrywide Financial Corp CFC.N denied market rumors that it was facing bankruptcy.
In Toronto, the financials sector was down 1 percent. Canadian Imperial Bank of Commerce (CM.TO), which has the largest subprime exposure of any Canadian bank, fell C$2.06, or 3 percent, to C$66.96, and Bank of Montreal (BMO.TO) dropped 60 Canadian cents, or 1.1 percent, to C$55.55.
"We keep on getting more and more surprises from the American financial system," said Sal Masionis, a stockbroker at Brant Securities.
"The whole financials situation is pretty scary; it's a big unknown," Masionis added.
The S&P/TSX composite index .GSPTSE closed down 77.12 points, or 0.57 percent, at 13,541.75 with all but one of the 10 main groups in negative territory. The index has declined 3 percent over three days.
"Generally, it's a little bit more of a speculative market, we're still trying to work through some of the challenges on the U.S. economy and the subprime business," said Brian Pow, vice-president, research and equity analyst at Acumen Capital Partners in Calgary.
"There are some people who are probably positioning for the long term and are doing bit of shopping with the selloff, but the general mood from talking to people here is they're looking more for selling opportunities than buying opportunities."
Despite an advance in oil prices, the energy sector gave up 0.5 percent amid worries that slower economic growth will dampen demand for resources.
The consumer discretionary group fell 2.1 percent, and the industrials sector shed 1.3 percent.
Materials was the sole group on the upside, adding 1.4 percent, while the golds subsector jumped 4.1 percent to notch a record high.
Goldcorp Inc (G.TO) added 73 Canadian cents, or 2 percent, to C$38.05, after it said it expected gold production to grow by 13.5 percent this year.
Market volume was a heavy 428 million shares worth C$8 billion. Decliners outpaced advancers 911 to 707. The blue chip S&P/TSX 60 index .TSE60 closed down 4.23 points, or 0.53 percent, at 793.25.
U.S. stocks took a beating after AT&T (T.N) warned of soft consumer spending, fanning recession fears amid worries over Countrywide's financial health.
The Dow Jones industrial average .DJI sagged 238.42 points, or 1.86 percent, to 12,589.07, and the Nasdaq composite index .IXIC ended down 58.95 points, or 2.36 percent, at 2,440.51.
Editing by Rob Wilson