UPDATE 2-Toronto stocks fall on uncertainty over US bailout

Mon Sep 22, 2008 11:41am EDT
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*TSX index opens lower after a 7 percent rally on Friday

*Uncertainty over U.S. bailout package prevails

*Materials stocks rise on higher gold, base metals prices

*Tanganyika Oil jumps after it says in talks with buyer

(Adds details)

TORONTO, Sept 22 (Reuters) - The Toronto Stock Exchange's main index stumbled on Monday morning on weakness in energy and financial shares as investors worried about the effects of the proposed $700 billion U.S. financial bailout plan.

The retreat came after news that the two remaining major U.S. investment banks, Goldman Sachs (GS.N: Quote) and Morgan Stanley (MS.N: Quote), have sought refuge in the arms of the U.S. Federal Reserve and transformed themselves into bank holding companies to survive the financial storm. [ID:nSP4331] [ID:nN13574113]

On Friday, the Toronto market soared on news if the bailout plan -- making its biggest percentage gain since 1987, rising 7.03 percent to 12,912,99 -- but it had some second thoughts on Monday.

"I would say there's still a lot of uncertainty out there as to the rescue package," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.   Continued...