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(Corrects bullet point and paragraph 10 to show the index touched lowest level since November 2004, not January 2004)
* Oil, materials groups sag as commodity prices fall
* Index touches lowest level since November 2004
* Toronto follows plunges by other major markets
By Ka Yan Ng
TORONTO, Oct 24 (Reuters) - The Toronto Stock Exchange's main index was down 1.5 percent by late morning on Friday, though up from big early losses, as it remained under pressure from fears of a global recession and a further slide in commodity prices.
In line with a wave of plunging equity markets worldwide [MKTS/GLOB], the Toronto index suffered broad-based losses but much of it was concentrated in the resource-related issues.
Shortly after 11:30 a.m. (1530 GMT), the S&P/TSX composite index .GSPTSE was down 153.49 points, or 1.6 percent, at 9,177.86.
The energy sector was off early lows, down 2.1 percent, as the price of oil dropped to above $64 a barrel. An emergency OPEC meeting resulted in a swift agreement to cut production as a first step towards halting the price slide [ID:nLO735433].
Nexen NXY.TO fell 4.9 percent to C$15.46, while Petro Canada PCA.TO rose 2 percent to C$28.39.
Analysts said the TSX had arrived at the "capitulation" phase as global markets have been unspooling for weeks because of an outlook for slower economic growth worldwide. Others said hedge funds were unwinding and margin calls were some contributing factors.
"There's an emotional factor where fear pushes greed right to the side of the stage and people feel they need to have closure at whatever price, at whatever cost," said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
"More often than not, when you get this it leads to some form of, at minimum, a trading bottom where the market is exhausted from the selling."
But bargain hunters will probably emerge as fears have knocked down some companies to what are "very, very cheap valuations on a fundamental basis," he said.
The opening moments on the Toronto index were described as "complete panic" by one stockbroker as the index fell 7.5 percent, nearly 700 points, to its lowest level since November 2004, before rebounding.
"Will there be any rally on the close? Who knows?" said Sal Masionis, stockbroker at Brant Securities. "Basically it is still the financial panic and nothing to do with valuations at all."
Eight of of the index's main 10 groups were lower, including the heavily weighted financials group, which was off 4.9 percent.
The materials sector turned positive, up 3.5 percent as the gold subindex gained of nearly 8 percent, with Barrick Gold (ABX.TO) advancing 8.6 percent to C$25.67.
Teck Cominco TCKb.TO, which dropped nearly 17 percent on Thursday as copper prices hit a three-year low. [ID:nN23411992], extended its losses early on as Desjardins Securities and UBS cut their targets on the diversified miner. [RCH/CA] But, it eked out a small gain of 0.2 percent to C$12.51.
As recession worries take center stage, profit and business operations outlooks will likely remain a primary focus as companies report quarterly earnings over the next several weeks.
$1=$1.27 Canadian Additional reporting by Jennifer Kwan and Scott Anderson; editing by Rob Wilson