TORONTO -- Canada's main stock index partially rebounded from its worst one-day decline in more than 30 years on the promise of fiscal stimulus by the U.S. and other governments and a lift in oil prices.

The S&P/TSX composite index gained as much as 543 points or 3.7 per cent in early trading before the rally fizzled and it started to lose ground, dipping lower at midday.

It then climbed steadily to close up 443.85 points or 3.1 per cent to 14,958.09. The TSX lost 1,660.78 points on Monday that put it close to a bear market by being down 18 per cent since Feb. 20.

A bear market is commonly defined as a loss of 20 per cent from a recent high.

"In a normal environment this would be a really big up day. In the current environment you really need to see two or three days of this before you get a feeling of some confidence," said Michael Currie, vice-president and investment adviser at TD Wealth.

The day's volatility demonstrates the lack of real commitment by buyers or sellers, he said, pointing to conflicting information about the response to the novel coronavirus.

"We're hearing about a stimulus package but we don't hear any details," he said in an interview. "We're hearing China say we've got things under control and Italy is saying we're shutting down the entire country on the same day. So as long as that's going on the information is certainly lacking so it's hard for someone to commit in either direction."

U.S. markets experienced a similar early rally with the Dow Jones industrial average climbing as much as 945 points before giving back all the gains and then some for an 1,100-point swing.

The Dow then rallied to close up 1,167.14 points or 4.9 per cent at 25,018.16 as it recovered more than half of Monday's 2,000-point loss. The S&P 500 index was up 135.67 points at 2,882.23, while the Nasdaq composite was up 393.57 points at 8,344.25.

Markets are expecting to hear details of a U.S. stimulus plan Tuesday or Wednesday and a proposal from the Canadian government perhaps in the upcoming budget, said Currie.

U.S. President Donald Trump promised Monday afternoon that he will ask Congress for payroll tax relief and other measures including financial support for airlines and the cruise industry to help support the economy against the spread of the novel coronavirus.

Japan also approved a 430 billion yen (US$4.1 billion) package with support for small to medium-sized businesses.

"If it's not as strong as the market wants you'll probably see another significant drop from here because a lot of what's built in today is expecting that and if we don't get it then it will have a significant impact on the markets."

Kathryn Del Greco, an investment adviser at TD Wealth Private Investment Advice, said the stock market rallied at the start of trading on the prospect of government action.

"They're trying to come up with as many sort of direct impact policies to help stimulate and just sort of quell the sense of urgency that's developing on this topic," Del Greco said.

Markets also moved Tuesday as investors, including those guided by algorithmic trading programs, were repositioning their portfolios.

"You're definitely seeing portfolios adjusted to reflect the new world that we're living in," Del Greco said.

The Canadian dollar traded for 72.83 cents US, the lowest in more than four years and compared with an average of 73.54 cents US on Monday.

Crude oil prices partially recovered from their huge decrease and that helped Canadian energy producers offset some of the massive declines they saw Monday. Cenovus Energy Inc. gained 11.3 per cent after losing 51.6 per cent on Monday when the capped energy index lost more than 27 per cent.

The decrease in oil prices was ignited by a price war after Russia refused over the weekend to roll back production and Saudi Arabia responded by vowing to ramp up output.

The drop rattled already jittery markets that had been under pressure due to concerns about the economic impact of the spread of the novel coronavirus that began in China.

But oil recovered about one-third of Monday's loss on reports that Russia and Saudi Arabia may meet in hope of striking an agreement.

The April crude contract was up more than 10 per cent or US$3.23 at US$34.36 per barrel and the April natural gas contract was up 15.8 cents at US$1.94 per mmBTU.

All 11 major sectors on the TSX were higher led by technology and industrials with Blackberry Ltd. and Shopify Inc. up 9.3 and 8.3 per cent respectively. Health care also rose on a 7.2 per gain of Canopy Growth Corp. shares.

The heavyweight financials sector closed up about 3.6 per cent with Laurentian Bank and Toronto-Dominion Bank each up more than 4.9 per cent.

Banks had been hit from their exposure to the oil and gas sector, falling interest rates and historically low bond yields that reduced margins. The U.S. 10-year treasury bond yield rose to 0.79 per cent, still below the one per cent threshold.

The April gold contract was down US$15.40 at US$1,660.30 an ounce and the May copper contract was up 1.1 cents at US$2.52 a pound.

This report by The Canadian Press was first published March 10, 2020.