UPDATE 5-Toronto stocks fall, but snap back from big loss

Thu Oct 16, 2008 5:22pm EDT
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* Bargain-hunters pull TSX back from 560-point drop

* Materials sector down 7.8 pct, oil group rebounds 2 pct

* TSX is down 26 percent since Sept. 25

(Adds analyst comments, details)

By Jennifer Kwan

TORONTO, Oct 16 (Reuters) - The Toronto Stock Exchange's main index fought back from a 560-point loss on Thursday to close only moderately lower as bargain-hunting took hold.

In erratic dealings, the TSX seesawed in a trading range of 670 points from peak to trough and in the end extended Wednesday's steep losses only slightly.

Gavin Graham, director of investments at BMO Asset Management, said the early selloff was based on fears that a recession in the United States and Europe could be a "pretty bad one".

"You could actually make the argument that this sort of revisiting of the lows we saw last week is a lot more justified in that it's being down on economic fundamentals as opposed to worries that the entire world financial system is going to seize up," he said.   Continued...