By Fergal Smith
TORONTO (Reuters) - Canada's main stock index clawed back almost all of its earlier decline to end slightly lower on Monday, after a volatile ride for the energy sector and as shares of Home Capital Group surged on a deal to take the mortgage lender private.
The Toronto Stock Exchange's S&P/TSX composite index ended down 3.78 points at 19,977.13, after falling as much as 193.86 points, or nearly 1%, intraday.
"We had an initial selloff to a point, which all began with the selling pressure that we were seeing from the commodities, particularly from the energy," said Sid Mokhtari, market technician and director, institutional equity research, at CIBC World Markets.
"Energy (prices) reached levels which technically are considered to be oversold."
The price of oil was volatile as Saudi Arabia denied a report it was discussing an increase in oil supply with OPEC and its allies. U.S. crude oil futures touched their lowest since January near $75 a barrel before settling down 0.4% at $79.73.
The Toronto market's energy sector ended 1.2% lower after having been down as much as 5.1% earlier in the day, while the materials group, which includes precious and base metals miners and fertilizer companies, was also a drag, dipping 0.2%.
In contrast, industrials rose 0.8% and heavyweight financials ended 0.2% higher.
The sector was helped by a 57.1% jump in the shares of Home Capital Group Inc after the mortgage lender said it would be acquired by Smith Financial Corp in a C$1.7 billion ($1.3 billion) deal.
"Smith sees a long term opportunity since Canada is anticipating over half a million immigrants who may not be qualified for mortgages from banks and will look to alternative lenders like Home Capital," said Barry Schwartz, a portfolio manager at Baskin Financial Services.
(Reporting by Fergal Smith; Additional reporting by Johann M Cherian in Bengaluru; Editing by Chris Reese)