TORONTO (Reuters) - The Toronto Stock Exchange's main index tumbled more than 2 percent in choppy action on Monday in a broad retreat on uncertainty over the effectiveness of the proposed $700 billion U.S. financial bailout plan.
The lone group to make gains was the materials sector, pushed up by gold producers as bullion prices rose on the commodity's safe-haven allure and the weaker U.S. dollar. Among gainers, Goldcorp (G.TO) was up 9.8 percent at C$37.89.
But the broader market was rattled by concerns over how much the U.S. government's plan to take over sour mortgage-related debt from financial groups will help financial markets in the long term, analysts said, as well as uncertainty over the details of the plan.
In Toronto, the financial sector was down 3.7 percent, while Bank of Montreal (BMO.TO) fell 4.8 percent to C$47.53.
"I don't know if anyone's really grasped what this means, what the implications are, (and) what the long term solutions are, if any," said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc, in Vancouver.
The S&P/TSX composite index .GSPTSE closed down 274.92 points, or 2.13 percent, at 12,638.07 with all but one of its 10 main sectors in a downturn.
The selloff comes after a stunning hike of more than 800 points on Friday on optimism over the U.S.-led moves to shore up the financial system, as well as a rally in commodities.
But by Monday some of the luster had worn off as investors worried about the outcome of the U.S. proposal.
"What you would normally do is take money and invest in some of these companies that you want to save, rather than buying their lousy loans," said Douglas Davis, president at Davis-Rea.
"It'll help, but it's just like a Band-Aid," Davis added.
A surge in oil prices failed to help the heavyweight energy sector as investors remained cautious over whether the gains would be sustainable. Oil spiked nearly 16 percent to settle at $120.92 a barrel as the front-month futures contract expired and the U.S. dollar weakened.
Toronto's energy sector lost 1.8 percent, while Canadian Natural Resources (CNQ.TO) was down 3.3 percent at C$84.47, and Suncor Energy gave up 5 percent to C$49.40.
BlackBerry-maker Research In Motion RIM.TO was the biggest net loser, falling 7.4 percent to C$101.39 and helping to drag the tech sector down 5.2 percent.
Shares of Angiotech Pharmaceuticals ANP.TO stumbled 27.9 percent to 98 Canadian cents after it said a large financing deal was in jeopardy due to rising costs and sliding royalty payments for its key stent coating product.
Market volume was 485 million shares worth C$9 billion. Decliners outpaced advancers 879 to 742. The blue chip S&P/TSX 60 index .TSE60 closed down 17.22 points, or 2.22 percent, at 759.65.
In New York, stocks were also dragged down by concerns swirling around the bailout plan, while the jump in oil prices prompted more worries over the ability of the consumer to keep spending.
The Dow Jones industrial average .DJI closed down 372.75 points, or 3.27 percent, at 11,015.69, while the Nasdaq Composite Index .IXIC lost 94.92 points, or 4.17 percent, to 2,178.98.
Editing by Peter Galloway