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TORONTO (Reuters) - Toronto's main stock index fell sharply early on Friday, led by financial and resource shares, in the wake of underwhelming jobs data in Canada and the United States and after the head of the International Monetary Fund expressed concern about the global economy.
U.S. employers likely quickened the pace of hiring last month but not enough to allay worries that Europe's debt crisis is shifting the economy into low gear.
In Canada, job growth slowed in June for a second straight month in a reality check after outsized employment gains earlier this year, firming the market's view that the Bank of Canada won't act soon on recent hints of a rate hike.
"They're not robust numbers," said Fred Ketchen, director of equity trading at ScotiaMcLeod.
"Economic activity in the U.S. is going nowhere fast. If we're depending upon an uptick there in order to spur us on, chances are it isn't going to come, at least in the short-term."
All of Canada's 10 main sectors fell. Losses were led by the heavyweight financials group, which dropped 1.1 percent.
Around 11 a.m. (1500 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 126.74 points, or 1.1 percent, at 11,690.29.
Adding to the gloomy sentiment, an index of purchasing activity in the Canadian economy hit its lowest level in almost a year. The Ivey Purchasing Managers Index fell to 49.0 in June from 60.5 in May, its lowest since July, 2011.
The Canadian oil and gas and materials sub-indexes both fell more than 1.5 percent as U.S. crude futures retreated below $85 a barrel and copper and gold prices slumped. <O/R> <MET/L> <GOL/>
The most influential decliners included Suncor Energy (SU.TO), off 2 percent at C$29.78, Canadian Natural Resources (CNQ.TO), which dropped 2.9 percent to C$26.74, Potash Corp (POT.TO), down 1.8 percent at C$45.32, and Teck Resources TCKb.TO, which slid 2.7 percent to C$32.06.
The weak jobs data came a day after China, the euro zone and Britain all loosened monetary policy, signaling growing alarm about the world economy.
The central bank action failed to impress investors on Friday, pushing Spanish borrowing costs back up to unsustainable levels reached before last week's European Union summit took measures designed to ease the pressure.
Investors were also spooked after IMF chief Christine Lagarde said the world economic outlook had deteriorated as both developed and big emerging nations show signs of slowing down.
"We've got growth worries," said Ketchen. "Given the fact that there's a whole lot of places that have instituted some kind of stimulus measures, so far it hasn't produced positive results."
Editing by Padraic Cassidy