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TORONTO (Reuters) - Toronto's main stock index closed lower on Friday as investors booked some profits after the TSX notched its biggest weekly gain in more than two years on optimism that steps were being taken to resolve Europe's debt crisis.
The mining-heavy materials sector dragged the index lower, as shares of gold miners slid despite spot gold edging higher to post its largest weekly gain in more than a month.
This was countered by strong financials, which were lifted by better than expected earnings from two of the country's largest banks.
Also helping investor sentiment was data that showed the U.S. unemployment rate fell to a 2-1/2 year low of 8.6 percent in November as companies stepped up hiring, further evidence the U.S. economic recovery was gaining momentum.
"I would have to think we've had a good week," said Fred Ketchen, director of equity trading at ScotiaMcLeod. "It's Friday and people don't want to go home without locking in some profits. I think we have seen that take place today."
The Toronto Stock Exchange's S&P/TSX composite index ended down 38.20 points, or 0.32 percent, at 12,075.09. Four of the index's 10 sectors were in positive territory.
Goldcorp, Canada's second largest gold producer, was the biggest weight on the index, slipping 3.7 percent to C$52.33. Barrick Gold, the world's No. 1 producer, also dragged on the materials sector, falling 3 percent to C$51.88.
Technology issues also fell, as Research In Motion plunged 9.2 percent to C$17.08 after the BlackBerry maker warned it would fall short of its financial targets after taking a huge charge to write down inventories on its underwhelming PlayBook tablet.
The Bank of Nova Scotia was another big drag on the index, falling 2.49 percent to finish the session at C$48.99, despite announcing a 10.7 percent rise in fourth-quarter profit.
Other banks fared better. The Royal Bank of Canada was the most heavily weighted gainer, up 3.7 percent at C$48.77, after Canada's biggest lender reported a quarterly profit that beat expectations.
No. 2 lender, Toronto-Dominion Bank, was the second top advancer, up 1.18 percent at C$72.75, after announcing stronger than expected results on Thursday.
Despite Friday's slide, the index posted a healthy 5.3 percent gain on the week. On Wednesday, the TSX had its biggest single-day gain since March 2009, jumping more than 4 percent.
Markets also latched on to chatter that policymakers appeared to move a step closer to tackling Europe's debt crisis.
German Chancellor Angela Merkel reiterated her strong support for the euro, and called for a rapid European Union treaty change to remedy the root causes of the euro zone's debt crisis. She warned, however, that Europeans faced a long, hard "marathon" to restore lost market credibility.
Equity strategists and fund managers polled by Reuters predict stocks will continue to grind higher in 2012 as policymakers iron out the euro zone's sovereign debt crisis and improving economic data in Canada and the United States soothes investor concerns about global growth.
"If the next big move is an up move, hold on to your hats, because this will be a run that lasts a number of months," said Brendan Caldwell, president and chief executive of Caldwell Investment Management Ltd.
"The fact that we haven't had a big down move to follow the up move (is) a very, very positive sign."
Additional reporting by Jon Cook; editing by Rob Wilson