Toronto stocks traded lower on Monday as investors were hit by a wave of skepticism over the U.S. financial bailout plan. However, the declines were somewhat offset by strong commodity prices, including the biggest one-day gain for oil prices in history.

The S&P/TSX composite index fell 274.92, or 2.1%, to 12,638.07, led by weakness in the financial and energy groups.

In a surprise move, crude for October delivery, which expires Monday, surged 15.7% to settle up US$16.37 at US$120.92 per barrel. Earlier in the day, oil futures were up more than 20%, hitting US$130 per barrel.

The energy group fell 1.8% on Monday. This included a 3.3% drop for Canadian Natural Resources, which closed at $84.47. Encana Corp. shares slipped 2.1%, closing the day at $74.20.

Financial stocks dropped 3.7% throughout the day.

Manulife Financial Corp. stocks rose early in the day after reports that the company is among the global insurers poised to bid for parts of American International Group Inc. But the shares changed direction and finished the day down 2.4% at $36.

Shares of Fairfax Financial Holdings Ltd. surged 8.5% to close at $320 after announcing that it has realized cash proceeds of $574.5 million so far in the third quarter from the sale of credit default swaps.

Strong metals prices pushed up the materials group 2.8%, with particular strength among gold companies.

Goldcorp Inc. rose 9.8% to close at $37.89 and Barrick Gold stocks enjoyed a 8.5% increase, closing at $39.61.

These gains were coincided with a 5% increase in gold futures. Gold for December delivery rose US$44.30 to close at US$909 an ounce on the Comex division of the New York Mercantile Exchange, ending above $900 for the fist time since Aug. 4.

The sub-gold index saw a 7.2% boost.

The Canadian dollar rose for a third day, thanks to rising commodities and weakness in the U.S. dollar compared to most of the world’s major currencies. It closed up more than cent, at US96.77¢.

The junior S&P/TSX Venture composite index increased 1.73% to 1,575.99.

On Wall Street, investor concerns over the US$700-billion bailout plan, which is awaiting approval from congress, pushed stocks down.

The Dow Jones industrial average slipped 3.3%, or 373 points, to 11,016. The S&P 500 fell 48 points, or 3.8%, to 1,207, led by financial stocks. The Nasdaq composite index was down 95 points, or 4% to close at 2,179.