TORONTO (Reuters) - Toronto's main stock index ended lower yesterday as nagging credit quality worries pulled shares of Canadian banks lower, but a late rally allowed the index to climb off a five-year low hit earlier in the session.

The financial sector, which accounts for about 30 percent of the index, led the decline as investors focused more on provisions for bad loans in the quarterly reports of Bank of Nova Scotia and Bank of Montreal than on the resilience of the banks in staying profitable.

Shares of insurer Manulife Financial led the index lower as its shares tumbled 11 percent to C$10.31, followed by Toronto-Dominion Bank, which ended down two percent at C$35.44.

The index staged a late rally as some investors figured the equity sell-off early yesterday may have marked the end of a grueling skid in global equities. But the rally sputtered as the session neared an end.

"We are groping for a low," said Ron Meisels, technical analyst and president of Phases & Cycles in Montreal. "The people who are looking at the market are now hoping and praying that the recent lows will hold."

The S&P/TSX composite index closed down 55.89 points, or 0.73 percent, at 7,631.62. At one point in the session the index fell 2.4 percent to its lowest since October 2003.

The health-care sector, which makes up barely any of the Toronto index, suffered the steepest decline with a drop of four percent, followed by a three percent drop in the key financial index, home to Canada's biggest banks and insurers.

Some of the index's skid to its lowest since 2003 was pegged to news ahead of the open that the Bank of Canada cut its benchmark rate to a record low of 0.5 percent and signaled that it may take extra steps to pump money into a system that remains stubbornly short of credit.

One day after falling to its lowest since January, the materials group rallied 2.46 percent to lead all other sectors and help cushion the broader index's slide. It drew investors back as prices for many base metals rallied.

Shares of Goldcorp rallied to close up 4.6 percent at C$36.44, while Kinross Gold shares jumped 5.7 percent to C$20.71.

"The market has been playing a push and pull game all day long," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary. "Bargain hunters came in every once in a while and then some sellers would send it back down. It was a real tug of war."