* TSX down 74.42 points, or 0.53 percent, at 14,069.75
* Eight of 10 main index sectors decline
* Gold-mining stocks surge with bullion price
* Talisman jumps after confirming interest from suitors
* AGF tumbles after dividend cut
By John Tilak
TORONTO, Dec 9 (Reuters) - Canada's main stock index dropped in volatile trading on Tuesday, extending a steep decline in the previous session, as the recent selloff in the price of oil fueled concerns about the health of the global economy.
Oil prices tumbled to a five-year low, weighed by fears of increasing supply and sluggish demand. They recovered later but have lost about 40 percent since June, hurting the energy sector in the process.
Shares of energy companies, which tumbled nearly 7 percent in the previous session, rebounded slightly. The negative sentiment for equities led to a surge in the price of bullion, which is seen as a safe-haven asset, helping drive up shares of gold miners.
But weakness in financials, the index's most heavily weighted sector, ensured the broader benchmark would stay in the red.
Investors tried to gauge the impact of a significantly lower oil price on the global economy, energy producers and equity markets.
"If you look at history, when you have a crash in oil prices it's not good for the overall economy," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
"It seems like a risk-off trade here," he added. "Equities are out of favor. Investors are taking money off the table on equities."
The Toronto Stock Exchange's S&P/TSX composite index was down 74.42 points, or 0.53 percent, at 14,069.75. Eight of the 10 main sectors on the index were in the red.
Financials gave back 1.4 percent, with Royal Bank of Canada losing 1.3 percent to C$78.81 and Bank of Montreal falling 1.3 percent to C$78.33.
In the oil and gas group, Canadian Natural Resources Ltd advanced 1.9 percent to C$36.33, and Suncor Energy Inc climbed 0.8 percent to C$33.97.
Talisman Energy Inc's shares shot up 11.9 percent, to C$4.81, after the company confirmed it was approached by several suitors for various transactions.
The gold-mining sector jumped 4.8 percent, with Goldcorp Inc advancing 4.2 percent to C$23.24.
In other corporate news, AGF Management Ltd said it would cut its quarterly dividend by 70 percent, sending its shares tumbling 16.5 percent to C$8.10. (Editing by Meredith Mazzilli)
