Toronto stocks end lower, rebound from early plunge

Tue Sep 16, 2008 6:14pm EDT
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By Natasha Elkington

TORONTO (Reuters) - The Toronto Stock Exchange's main index rebounded late Tuesday to end down slightly, after sliding to its lowest level in almost two years, as investors fretted over the fate of U.S. insurer American International Group (AIG.N: Quote) and the price of oil fell to a seven-month low.

In a volatile session that threatened to build on Monday's 4 percent plunge, the S&P/TSX composite index briefly dove into bear market territory, before staging a rebound on the back of strengthening resources.

"This market is so oversold that it's primed for one heck of a rally, if we can get just any glimmer of good news," said Rick Hutcheon, president and chief operating officer at RKH Investments.

The resource-heavy materials group added 2.78 percent. Potash Corp (POT.TO: Quote) jumped C$11, or 6.7 percent, to end at C$174.83. Barrick Gold (ABX.TO: Quote) was up 4 percent at C$30.87 and Ivanhoe Mines IVN.TO was up 9.53 percent at C$9.31.

Worries about AIG's ability to continue to fund its operations weighed on financial issues, but a report late in the session that the Federal Reserve was considering a loan to aid the struggling insurer helped lift the sentiment.

The upheaval that has beset the U.S. financial sector also sent investors fleeing from oil, sending the commodity to below $92 a barrel.

"You really have the market incredibly nervous, incredibly skittish from being moved almost moment to moment on more rumor than any substantive news," said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.

The S&P/TSX composite index .GSPTSE closed down 27.04 points, or 0.22 percent, at 12,226.99 after earlier touching a low of 11,903.09.   Continued...

<p>People walk by a sign displaying TSX information in Toronto, September 15, 2008. REUTERS/Mark Blinch</p>