UPDATE 1-Toronto stock index slips 2.8 pct on AIG worries

Tue Sep 16, 2008 10:12am EDT
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*Oil slips as financial turmoil seen undercutting demand

*Investors await U.S. Federal Reserve's rate decision

*Toronto benchmark index crosses bear market threshold

(Adds details)

TORONTO, Sept 16 (Reuters) - The Toronto Stock Exchange's main index tumbled at the open on Tuesday, as investors worried over U.S. insurer American International Group's (AIG.N: Quote) ability to secure fresh capital and on a big drop in oil.

Shortly after the open, the S&P/TSX composite index .GSPTSE was down 345.37 points, or 2.82 percent, at 11,908.66, with all of its 10 main groups lower.

The move below 12,058.50 pushes Canada's main stock index across the threshold of a bear market, commonly defined as a 20 percent drop from a peak level. The TSX reached a peak of 15,073.13 on June 18.

The hefty financial services sector slipped 1.8 percent with Canadian Imperial Bank of Commerce (CM.TO: Quote) down 4.5 percent at C$58.35, while Royal Bank of Canada (RY.TO: Quote) fell 3 percent to C$46.65.

AIG, thrown a $20 billion lifeline from New York state, came under fresh pressure as rating agencies downgraded the insurer's debt. [ID:nSP46833].   Continued...