October 8, 2008 / 3:17 PM / 10 years ago

UPDATE 1-Toronto stock index drops after wild swings

* Bank of Canada’s 50 bps rate cut buoys sentiment

* Materials sector rallies, gold subindex jumps

* Trading swings wildly in first 30 minutes

(Adds details)

TORONTO, Oct 8 (Reuters) - The Toronto Stock Exchange’s main index dropped after wild swings during early dealings on Wednesday, as investors took little comfort from a surprise interest-rate cut by the Bank of Canada designed to calm financial markets.

Within the first 30 minutes of the session, the index then swung more than 200 points into positive territory as the two materials and financial sectors, which account for nearly half the index weighting, posted strong gains. By midmorning, the index was in negative territory.

Shortly after 11 a.m. (1500 GMT), the S&P/TSX composite index .GSPTSE was down 164.11 points, or 1.67 percent, to 9,665.44. Eight of the index’s main 10 groups were lower.

The materials group, which includes miners and fertilizer shares, was the main source of the index’s strength, gaining 3.44 percent. Potash Corp of Saskatchewan POT.TO, the biggest net gainer, jumped 7.4 percent to C$104.05.

The gold subindex rose for a second session in a row, up 7.22 percent. Agnico-Eagle rose 3.6 percent to C$52.18, while Goldcorp gained 6 percent to C$30.55. Kinross rose 8.7 percent to C$16.58.

The financials group turned negative after initially charging higher, with Manulife Financial off 5.4 percent at C$30.92.

Earlier on Wednesday, the Bank of Canada unexpectedly cut its key interest rate by a half percentage point to 2.5 percent. [ID:nN08492471]

$1=$1.10 Canadian Reporting by Ka Yan Ng

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