UPDATE 4-Rate cut, golds boost Toronto stocks

* Bank of Canada's rate cut lifts sentiment

* Materials sector rallies, led by gold stocks (Adds details and quotes, updates official figures)

By Cameron French

TORONTO, Oct 8 (Reuters) - The Toronto Stock Exchange's main index ended more than 200 points higher on Wednesday after a volatile session, as a surprise, co-ordinated interest rate cut by several central banks restored some confidence to investors and lit a fire under mining stocks.

After five straight days of steep losses and an initial drop at the open on Wednesday, buyers swept in to pick up bargains after the Bank of Canada cut its key interest rate by a half percentage point to 2.5 percent, part of a concerted effort by central banks. [ID:nN08492471]

However, the market swung wildly all day, spending much of the session in the red, as weaker oil prices and continued worries about the possibility of a global recession kept investors on a hair trigger.

"Overall, we're just seeing an overreactive market to every small movement, whether it be interest rates or commodity prices or whatever," said Michael Sprung, president of Sprung & Co. Investment Counsel.

The S&P/TSX composite index .GSPTSE ended the session up 226.76 points, or 2.31 percent, at 10,056.31.

Seven of its 10 subgroups rose, led by a massive 12.27 percent gain for the mining-heavy materials sector.

Gold producers such as Barrick Gold (ABX.TO) and Kinross Gold (K.TO) led the way, rising 19 percent and 23 percent respectively as gold prices pushed above $900 an ounce for the first time in more than a week.

Barrick ended at $40.05, while Kinross closed at C$18.75.

Analysts said the move was largely a rebound from the hard selling miners have experienced recently as concerns that a global recession could slash demand for metals eased a bit.

Also in the sector, fertilizer producer Potash Corp (POT.TO) leaped 14 percent to C$110.50, while base metals producer Inmet Mining (IMN.TO) gained 17 percent to C$42.45.

The wild market swings contributed to an unusually high trading volume of 768.7 million shares, valued at C$11.3 billion.

Despite the index's rise, declining issues outnumbered advancers 1,180 to 530, suggesting investors were rushing back in to larger blue-chip stocks and avoiding smaller, higher-risk issues.

Independent strategist Elvis Picardo said the mining rebound, in particular the jump in gold stocks, was a sign the market might be starting to shed the "sell everything" panic that has gripped it in the past week.