UPDATE 4-Toronto stocks retreat as financials sag

TSX closes lower after late-day retreat

*Financials fall on nagging credit crunch woes

*Resources hold onto gains as commodities climb

By Leah Schnurr

TORONTO, July 28 (Reuters) - The Toronto Stock Exchange's main index ended lower on Monday after a late-day retreat as nagging concerns about more fallout from the credit crunch pulled down Bank of Nova Scotia (BNS.TO: Quote, Profile, Research) and other financials.

The drop may have proven deeper if not for energy and gold shares, which rose as prices for their underlying commodities climbed, in part because of a weaker U.S. dollar. In the oil patch, Canadian Natural Resources (CNQ.TO: Quote, Profile, Research) rose 1.3 percent, while among the miners, Goldcorp (G.TO: Quote, Profile, Research) added 2.4 percent.

After climbing by more than 1 percent in the morning, the index reversed course, yanked down by banking stocks tracking losses in their U.S. counterparts.

Fresh worries of more credit losses stung the sector after U.S. regulators on Friday took over two small banks that had failed. In Toronto, Bank of Nova Scotia gave up 2.3 percent.