Markets climbed after the U.S. Federal Reserve announced a 50 basis point cut to its key fed funds rate on Wednesday, but the surge didn’t last and stocks slumped late in the day.

Financials and industrials dragged the S&P/TSX composite index down 48.23 points, or 0.37%, to close at 12,998.20.

Six of the 10 main TSX groups dropped.

The gold sub-group gained 0.77%, while April’s gold contract closed down US$4.50 at US926.30 an ounce, before the Fed rate cut announcement.

Iamgold shares lost 40¢, or 4.22%, closing at $9.07, after the company estimated production would decline 5% decline in 2008.

The energy group gained 0.66%.

Crude futures rose on the news of the Fed rate cut. The March contract ended the session up 69¢, or 0.8%, at US$92.33 a barrel on the Nymex.

The heavyweight financials group lost 0.88%.

CIBC shares lost $1.98, or 2.81%, to close at $68.57, while Bank of Montreal shares lost $1.14, or 1.97%, closing at $56.61.

AGF Management Ltd. shares dropped 83¢, or 3.44%, to close at $23.30, after the company released its financial results for 2007 and announced a 25% dividend increase.

In individual stocks, Suncor Energy stock gained $2.40, or 2.63%, to close at $93.50, after the company announced approval of for a $20.6-billion
expansion of its operations in Alberta’s oilsands.

The Canadian dollar closed out at par for the second day, up 0.01 of a cent from yesterday’s close.

The junior S&P/TSX Venture composite index rose 3 points, or 0.12%, at 2,555.38.

In New York, markets surged following the Fed announcement, but quickly lost ground and closed in the red.

The Dow Jones industrial average lost 37.47 points, or 0.30%, to close at 12,442.83.

The S&P 500 fell 6.49 points, or 0.48%, ending the session at 1,355.81.

The tech-heavy Nasdaq composite index fell 9.06 points, or 0.38%, to 2,349.00.