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(Corrects paragraph 9 to show Scotiabank reports earnings on Dec. 2, but does not kick off banks' earnings season)
* Market down 2.5 pct after bouncing around after open
* Financials lead slide after gloomy Scotiabank news
* Rally in gold issues helps cushion decline (Adds details)
By Frank Pingue
TORONTO, Nov 19 (Reuters) - The Toronto Stock Exchange's main index was down more than 200 points by late morning on Wednesday after a see-saw open when heavily weighted financial shares were hit hard and gold shares rallied sharply.
The market initially opened lower and erased the 40-point gain recorded in the previous session, but later reversed and rose as much as 36 points as shares in gold-mining companies rallied around a higher gold price.
But the slim gain was short-lived as the market moved back into negative territory along with other North American equity indexes that were feeling pressure from financial issues.
By 11:35 a.m. (1635 GMT), the S&P/TSX composite index .GSPTSE was down 217.45 points, or 2.46 percent, at 8,618.28, with eight of its 10 sectors in negative territory.
Financials sagged on gloomy news from the banking sector on both sides of the border. Late on Tuesday, Bank of Nova Scotia (BNS.TO) said it would take a C$595 million after-tax charge in the fourth quarter because of sliding markets and "unprecedented volatility".
Scotiabank's writedown followed U.S.-based Citigroup's (C.N) announcement on Monday that it would slash 52,000 jobs globally in a bid to restore its financial health.
"I think this may be a reality check on the disappointment that's going to be in the banks' earnings," said John Kinsey, portfolio manager at Caldwell Securities Ltd. "I think people maybe were hoping that we could skate through without any news of writedowns ... but this may be the start of it now."
Shares of Scotiabank were down C$1.90, or 5 percent, at C$35.27, while Canadian Imperial Bank of Commerce (CM.TO) dropped C$2.30, or 4.5 percent, to C$48.60.
Scotiabank is set to report earnings on Dec. 2 and will be followed by Toronto-Dominion Bank (TD.TO), CIBC, Royal Bank of Canada (RY.TO), National Bank (NA.TO) and Canadian Western (CWB.TO) later that week.
The financial group, which makes up about a third of the main TSX index, was down 4 percent, while the energy group was off 3 percent as oil prices fell to a 22-month low.
A rally in gold prices to their highest level in more than a week sparked buying interest in gold-mining companies and helped to cushion the broader market's slide.
$1=$1.23 Canadian Reporting by Frank Pingue