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* TSX down 44.42 pts, or 0.4 pct, at 12,441.17
* Gold miners, financials drag
* Greek debt deal progress helps sentiment
By Jon Cook
TORONTO, Feb 17 (Reuters) - Toronto's main stock index was lower at midday on Friday as earnings-related drops in gold-mining and financial shares offset optimism that Greece will seal a long-awaited bailout deal next week and avoid a messy debt default.
Soft earnings from Canada's top gold miners this week dragged on the heavyweight materials sector, which fell 1 percent. Financial shares were down 0.2 percent, hurt by a big quarterly loss reported by Fairfax Financial Holdings.
Among miners, Barrick Gold tumbled 2.1 percent to C$46.99 after the country's largest gold producer reported an increase in quarterly operating profit on Thursday, but still fell short of expectations.
Smaller miners Kinross Gold and Agnico-Eagle also weighed after both reported massive impairment charges. Kinross was down 2.3 percent at C$10.81, and Agnico-Eagle fell 2.8 percent to C$35.54
The bearish sentiment on gold miners was likely the result of broader uncertainty among investors about the global economy and the direction of bullion prices, said Fred Ketchen, director of equity trading at ScotiaMcLeod.
"They're just wandering what's the next thing we're going to find out," Ketchen said. "If that's positive, the price of gold probably goes up, and if it's got a negative twinge to it, the price of gold probably goes down."
At noon (1700 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 44.42 points, or 0.4 percent, at 12,441.17 after opening higher.
The market fell despite news that Greece was close to an agreement with euro zone policymakers on a debt swap deal. Finance Minister Jim Flaherty said on Friday he was "cautiously optimistic" that European leaders would resolve the Greek debt crisis next week.
"Some of the rhetoric that we've been hearing over the last 24 hours makes you feel that they're getting there," Ketchen said.
Signs of Greek progress failed to help Canadian financial issues. Fairfax Financial pulled the sector down, sliding more than 6 percent to C$391.78 after the property and casualty insurer run by investment guru Prem Watsa said on Thursday its fourth-quarter loss widened by 56 percent to C$771.5 million ($771.3 million).
Oil and gas issues edged up 0.2 percent as Brent crude hovered near $120 a barrel on Friday, supported by tension between Iran and the West. Talisman Energy led gains, up 2.2 percent at C$13.68.
Encana Corp rose 0.8 percent to C$20.51 after Canada's third largest energy producer said on Friday it will sell a 40 percent stake in British Columbia gas assets to Japan's Mitsubishi Corp in a C$2.9 billion deal that will help it shore up a balance sheet battered by weak gas prices.