Amid a further drop in oil prices Tuesday, U.S. stock markets looked set to extend the previous day’s gains on the government bailout of mortgage giants Fannie Mae and Freddie Mac.

Here at home, the drop in the price of oil as the threat from Hurricane Ike was downgraded likely means another turbulent session for the energy-heavy Toronto StocK Exchange.

Light, sweet crude for October delivery dropped US$1.23 to US$125.11 in electronic trading on the New York Mercantile Exchange.

The Canadian dollar opened at US94.2¢, up 0.28 of a cent from Monday’s close.

In today’s earnings news, Major Drilling Group International Inc. reported a first-quarter profit of $26.3 million, up from a year-ago $18.9 million as revenue roses to a quarterly record $178.2 million from $143.4 million.

The company declared it is instituting a semi-annual dividend of 20¢ per share.

In M&A news, mutual fund manager CI Financial Income Fund is reported to be in preliminary talks to sell investment banking unit Blackmont Capital Inc. to Canaccord Capital Inc. in exchange for a minority stake in the Vancouver-based investment dealer.

In August, CI connfirmed that it had discussions with a number of parties concerning possible strategic combinations involving CI and its subsidiaries.

Overseas, Asia markets fell back on lingering pessimism about a global slowdown.

In Japan, the benchmark Nikkei 225 average shed 1.77% to 12,400.65, a day after surging 3.4%.

Hong Kong’s Hang Seng lost about 1.5%.

In Europe, the UK’s FTSE 100 rose 1.04%, Germany’s DAX index added 0.75%, and France’s CAC 40 rose 0.82%.

Toronto stocks tumbled again on Monday after early enthusiasm over the U.S. mortgage bailout plan fizzled and concerns over demand for commodities dragged resource shares lower.

The S&P/TSX composite index closed down 181.59 points, or 1.42%, at 12,634.83. Eight of the 10 main TSX groups closed in negative territory.

The heavyweight energy and materials sectors led the downside as worries resurfaced over how demand for commodities will fare in the face of sluggish global growth.

The financial sector gained 1.5%, buoyed after the U.S. government took control of mortgage finance giants Fannie Mae and Freddie Mac on Sunday.

The junior S&P/TSX Venture composite index fell 40.48 points, or 2.23%, to end at 1,771.63.

In New York, the Dow Jones industrial average closed up 290.18 points, or 2.59%, at 11,510.49. The S&P 500 finished up 25.48 points, or 2.05%, at 1,267.79. The Nasdaq composite index was up 13.88 points, or 0.62%, at 2,269.76.