* Toronto stocks off 27 points as resources strengthen
* U.S. financial woes, oil price continue to weigh (Updates numbers, adds details, comments)
By Natasha Elkington
TORONTO, Sept 16 (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 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 jumped C$11, or 6.7 percent, to end at C$174.83. Barrick Gold ABX.TO 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.
All but two of the TSX’s 10 main groups ended in the red, including the key energy and financial sectors, which lost 0.46 percent and 2.01 percent, respectively.
Among the day’s losers, Suncor Energy SU.TO fell 62 Canadian cents, or 1.3 percent, to finish at C$45.63. Royal Bank of Canada RY.TO shed C$1.60, or 3.3 percent to end at C$46.50.
And BCE Inc BCE.TO, Canada’s biggest telecommunications company, continued to slide as investors worry the funding of its C$34.8 billion buyout could fall apart amid turbulent credit markets. The stock fell 67 Canadian cents, or 1.8 percent, to finish at C$37.18.
Market volume was a heavy about 599 million shares worth C$10.7 billion. Decliners outpaced advancers 1,193 to 423. The blue chip S&P/TSX 60 index .TSE60 closed 1.33 points higher, or 0.18 percent, at 734.25.
On Wall Street, stocks managed to climb back from their biggest drop in seven years on a more positive note with news of a possible rescue of AIG.
The Dow Jones industrial average .DJI rose 141.51 points, or 1.3 percent, to 11,059.02 while the Nasdaq composite index .IXIC ended up 27.99 points, or 1.28 percent, at 2,207.90.
$1=$1.07 Canadian Reporting by Natasha Elkington; editing by Rob Wilson