CANADA STOCKS-TSX tumbles on TD warning, sliding oil price

* Index hits lowest level since December 2003

* TD announces credit trading losses, stock down

* Losses accelerated by sliding oil

* Teck drops 32 percent on cost cut plans

By Ka Yan Ng

TORONTO, Nov 20 (Reuters) - The Toronto Stock Exchange's main index fell more than 4 percent on Thursday as the financials group was weighed down by an earnings warning from Toronto-Dominion Bank (TD.TO) and the price of oil slid to a 42-month low.

The index's financials group dropped 7 percent, extending the previous session's slide as TD became the second bank this week, after Bank of Nova Scotia on Tuesday, to announce credit trading losses. [ID:N20398511]

TD, Canada's second-largest bank, said that C$350 million in after-tax credit trading losses will eat into fourth-quarter earnings. Its shares lost 7.3 percent to C$46.27.

All other major banks saw steep losses as worries mounted that similar news will emerge from TD's peers. CIBC (CM.TO) led all banks lower, down 9.3 percent at C$43.80. Heavyweight insurer Manulife Financial (MFC.TO) also fell, down 12 percent at C$18.47.

Shortly after 11:50 a.m. (1650 GMT), the S&P/TSX composite index .GSPTSE was down 394.22 points, or 4.64 percent, at 8,096.34, clawing back after dropping below the psychologically important 8,000 mark earlier in the day, when it hit its lowest level since December 2003.

All 10 of the index's main sectors were in the red.

"TD is part of it. Also there's a sense of panic when you see another central bank that eases 100 basis points when it's not expected," said Francis Campeau, a broker at MF Global Canada, in Montreal, referring to the Swiss National Bank's rate cut on Thursday. [ID:nLK597124]

"There is no reason to cheer about anything right now. The technicals are ugly as well."

The energy sector was down 7.4 percent as oil fell briefly below $50 a barrel, deepening losses from the previous four sessions as battered financial markets reflected crumbling confidence in the world economy and evidence mounted of falling fuel demand. [ID:nSP424057]

Energy issues Canadian Natural Resources (CNQ.TO) and EnCana (ECA.TO) were down 13.6 percent and 6 percent, respectively. News that Alberta had softened its shift to higher oil and gas royalties was outweighed by the slide in oil prices.

Alberta, with its top industry facing skidding oil prices amid the global credit crisis, said it will offer companies lower royalties for new oil and gas wells over the next five years. [ID:nN19363515]