(Corrects paragraph 5 to show TSX index was up 28.54 points, rather than 38.47)
* TSX bounces back from 1.2 percent midafternoon drop
* Financials rise on better tone from overseas recovery
* Materials weigh, gold issuers top movers to downside
TORONTO, Jan 26 (Reuters) - Toronto’s main stock index rebounded on Monday as a rally in the financial and energy sectors offset pressure from the materials group.
A recovery in beaten-down bank shares overseas helped set the direction on the Toronto Stock Exchange, where financial shares account for about a third of the index.
Rising sentiment brought on by a surge in Dutch financial giant ING Groep ING.AS, which said it would tap into government guarantees, and Britain’s Barclays (BARC.L), which flagged a strong start to the year, was enough to maintain a positive tone in Toronto’s financials group for much of the session. [ID:nLQ150771]
The heavily weighted oil and gas group rose 1.3 percent even as oil prices gave way to expectations that U.S. oil stockpiles were set to build.
The two groups, which make up more than half the index’s weighting, helped the S&P/TSX composite index .GSPTSE eke out a modest gain of 28.54 points, or 0.33 percent, to finish at 8,656.51. Seven of the market’s 10 main groups advanced as the market clawed back from a 1.2 percent fall, but remained well off its early 2.2 percent gain.
On the downside, gold producers were major decliners as the broader materials sector was down 1.7 percent.
“You’re going to have this period of volatility but the market is at the process of putting in a bottom. We are at the lower end of the trading range of where we’ve been,” said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
“All things being equal, the market will probably start to move higher again, at least probably within its trading range.”
$1=$1.22 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson