After a rough day Monday, U.S. markets managed to bounce back slightly on Tuesday, but the descent continued in Canada.

The S&P/TSX composite index finished the day down another 27 points, or 0.22%, to 12,226.99, while the junior S&P/TSX Venture composite index declined 75.77 points, or 4.94%, to 1,459.04.

The TSX slide was led by a 2.88% drop in the diversified metals group and a 2.01% decrease in financials.

Manulife Financial Corp. shares were down 2.7% to $36 by day’s end, following news that it may hold up to $1.36 billion in debt sold by American International Group Inc. and other troubled U.S. financial institutions.

Shares of Teck Cominco Ltd., Canada’s largest diversified miner, fell 3.38% on concerns that financing the takeover of Fording Canadian Coal Trust will be more difficult because of the deepening credit crisis. Teck Cominco shares closed at $35.40.

The materials group ended the day up 2.78%. This was helped by a 4.27% increase for Agrium Inc., thanks to record low inventories of potash that have pushed up the price of the fertilizer. Agrium shares closed at $82.

The TSX gold sub-index increased 3.94% even as gold for December delivery lost US$6.50, or 0.8%, to end at US$780.50 an ounce the New York Mercantile Exchange.

The energy group was down 0.46% as oil futures fell almost 5% to their lowest closing level since February. Crude oil for October delivery closed at US$91.15 per barrel on the Nymex, down US$4.56, or 4.8%.

The Canadian dollar slipped as the U.S. greenback gained ground. The loonie fell 0.16 of cent to close at US93.50¢.

In New York, U.S. stocks rallied after the U.S. Federal Reserve left its benchmark fed funds rate unchanged at 2%.

The Dow Jones Industrial Average snapped a two-day losing streak, increasing 141.51 points, or 1.3%, to close at 11059.02.

The S&P 500 gained 20.9 points, or 1.8%, to 1,213.6, while the tech-heavy Nasdaq Composite climbed 27.99 points, or 1.3%, to 2,207.9.

Shares of AIG tumbled amid concerns the major insurer could collapse. Media reports that the government might step in to rescue the company helped shares regain some ground, but they closed down 21.2% at US$3.75.

IE