UPDATE 2-Toronto stock index sags in broad selloff

Wed Oct 8, 2008 12:39pm EDT
 
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* Bank of Canada's rate cut initially buoys sentiment

* Energy leads downturn as oil price drops

* Materials sector rallies, gold subindex shines (Adds details and quotes)

By Ka Yan Ng

TORONTO, Oct 8 (Reuters) - The Toronto Stock Exchange's main index dropped after wild swings during on Wednesday, as investors took little comfort from a surprise interest-rate cut by the Bank of Canada designed to calm financial markets.

In a concerted effort with other central banks to lift confidence during the intensifying market turmoil, the Bank of Canada cut its key interest rate by a half percentage point to 2.5 percent. [ID:nN08492471]

Within the first 30 minutes of the session, the index fell more than 300 points, then swung more than 200 points into positive territory. The materials and financial sectors, which account for nearly half the TSX's weighting, posted strong gains during this time.

But the rise was short-lived as investors worried that the central banks' moves would not be enough to fix the credit crisis. By midday, the index was in deep negative territory.

Shortly after noon (1600 GMT), the S&P/TSX composite index .GSPTSE was down 235.41 points, or 2.4 percent, at 9,594.14. Eight of its 10 main groups were lower.   Continued...