* Main index ends slightly lower after big early drop
* TSX down 2.8 percent for the week
* Financial sector leads Friday’s fall, down 2.5 percent
* Materials group up 4.9 percent on rising gold price (Adds quote, details)
By Jennifer Kwan
TORONTO, Oct 24 (Reuters) - The Toronto Stock Exchange’s main index closed only slightly lower on Friday, erasing most of the 7.5 percent loss it started the day with, rattled by the recession fears that sparked big selloffs on Asian and European markets and on Wall Street.
The key S&P/TSX composite index .GSPTSE closed down 37.26 points, or 0.4 percent, at 9,294.09. Just after the open it plunged more than 700 points to touch its lowest level in four years.
Gold mining shares aided the comeback, with bullion prices rising as safe-haven buying emerged on fears that global stock markets were heading into freefall. The gold-mining subindex was up 7.9 percent. [ID:nL1449620]
“There always is a disconnect between commodity prices and the underlying companies, and maybe today (the market) felt the disconnect between gold and the gold companies was far enough that there’s an opportunity there,” said Brian Pow, vice-president, research and equity analyst at Acumen Capital Partners, in Calgary, Alberta.
The broader mining-heavy materials sector was up 4.9 percent.
Analysts had said the TSX had arrived at the “capitulation” phase as global markets have swooned on fears of a worldwide downturn. Others said hedge funds were unwinding and margin calls were some contributing factors.
The market had taken its earlier cue from the United States, which saw overnight selling so steep that U.S. stock index futures were halted until after the opening bell.
“By any form of measurement, this market is deeply, deeply oversold,” said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
“We will get to a point, that I will suggest will be within days, where the market is exhausted on the selling side and at a minimum you’ll get a significant trading bounce.”
For the week, the TSX was down 2.8 percent. For the year it is down 32.8 percent.
The financial services group fell 2.5 percent, with Manulife Financial (MFC.TO) off 3.9 percent at C$25.00 as several analysts downgraded their share-price targets for the company. [ID:nN24523458]
The oil and gas sector slid 0.2 percent as U.S. crude dropped $3.69 to $64.15 a barrel despite an OPEC decision to cut production in a bid to stem the oil price slide [ID:nN24513540].
EnCana Corp (ECA.TO) rose 1.3 percent to C$55.78.
Market volume was 539.4 million shares worth C$7.92 billion. Decliners outpaced advancers 1,088 to 472.
The blue chip S&P/TSX 60 index .TSE60 closed 1.13 points lower, or 0.2 percent, at 561.39.
The market retreat was far more pronounced south of the border because of fears of recession and a darker outlook for corporate profits.
The Dow Jones industrial average .DJI fell 312.30 points, or 3.59 percent, at 8,378.95, while the Nasdaq composite index .IXIC ended down 51.88 points, or 3.23 percent, at 1,552.03. ($1=$1.27 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)