A volatile day on North American stock markets saw U.S. stocks rebound from Monday’s losses, while the Toronto Stock Exchange’s benchmark index dipped further into the red.

The S&P/TSX composite index fell 78.4 points, or 0.93%, to close at 8,327.81 on Tuesday.

Financial companies led the fall, dropping 4.3% as earnings season continued to put the spotlight on the challenges facing Canadian banks.

Shares of the Bank of Nova Scotia fell $2.47, or 7.1%, to $32.38 after the bank reported fourth quarter profit of $315 million, down from $954 million in the same quarter last year.

Manulife Financial Corp. dropped 2.8% to $19.89 after it announced it would issue $2.125 billion in common equity, and expects to report a $1.5-billion fourth-quarter loss because of annuity provisions.

Crude oil for January delivery ended down US$2.32, or 4.7%, to US$46.96 a barrel on the New York Mercantile Exchange, the lowest closing level since May 20, 2005.

In spite of the eroding price of oil, however, the energy group managed to recoup some of Monday’s losses, rising 1.7%.

Shares of Nexen Inc. jumped 9.3% on reports that French oil company Total SA was preparing to make a $19.7 billion takeover offer for the oil explorer. Nexen shares closed at $23.88, up $2.03.

Talisman Energy Inc. shares also moved upward with momentum, gaining 9.15% to close at $11.21.

EnCana Corp. shares rose 3.1% to $53.94.

Husky Energy Inc.’s stock shed 5.1% to $29.26 despite Monday’s news that the company had won a bid for a new exploration property in Newfoundland.

Gold futures moved higher on Tuesday, helping the TSX materials group gain 3.4%. Gold for February delivery rose US$6.50, or 0.8%, to end at US$783.30 an ounce on the Comex division of the New York Mercantile Exchange.

The sub-gold index rallied 7.57%.

Goldcorp Inc. rose by 6.7% to $31.10 and Barrick Gold Corp. gained 6.1% to close at $34.64.

Also sharply higher were Kinross Gold Corp., up 10.1% to $18.68 and First Quantum Minerals Ltd., up 8.35% to $17.12.

Yet more losses were incurred by shares of telecommunications giant BCE Inc., which closed at $22.12, down 4.1%. This contributed to a 2.4% dip for the telecommunications group on the TSX.

The S&P/TSX Venture index dipped 8 points, or 1.08% to close at 731.1.

Lower oil prices put downward pressure on the Canadian dollar. It lost US0.37¢, to close at US79.94¢.

The main indexes in New York fluctuated sharply throughout the day, and finished with considerable gains on the heels of Monday’s nosedive.

The Dow Jones industrial average rose 270 points, or 3.3%, to end at 8,419.09.

The Nasdaq composite index finished the day at 1,449.8, up 51.73 points, or 3.7%. The S&P 500 index rallied 32.6 points, or 4%, to close at 848.8.