* TSX down 7.86 points, or 0.06 percent, at 12,585.23 * Eight of 10 main index sectors decline. * Barrick Gold gains on production milestone By John Tilak TORONTO, Jan 15 (Reuters) - Canada's main stock index was little changed on Tuesday as financial stocks weakened on concerns about fallout from the battle in Washington over raising the U.S. borrowing limit, but the drop was offset by gains in Barrick Gold Corp and other miners. U.S. President Barack Obama rejected on Monday any negotiations with Republicans over raising the U.S. borrowing limit. That helped pull the Toronto market off highs spurred by the U.S. budget deal at the start the month that averted the "fiscal cliff" of massive tax hikes and spending cuts. "The debt ceiling debate is likely to be even more heated. As a result, markets are skittish on the prospect of that," said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri. "Ultimately some resolution, some deal will be struck to avoid U.S. defaults. But it's not going to come without theatrics in the meantime," he added. "From now until late February, we are likely to get more volatility in the markets." The Toronto Stock Exchange's S&P/TSX composite index was down 7.86 points, or 0.06 percent, at 12,585.23. Eight of the 10 main sectors on the index were trading in the red. The financial sector, the index's largest, slipped 0.4 percent. Manulife Financial Corp fell 2.3 percent to C$13.99, Bank of Nova Scotia gave back 0.5 percent to C$57.38, and Toronto-Dominion Bank lost 0.4 percent to C$81.50. Some of the market weakness was outweighed by gains made in the materials sector, which includes mining stocks, as commodity prices rose. Barrick rose 2.1 percent to C$34.36 after the miner said it had achieved commercial production at its Pueblo Viejo mine in the Dominican Republic. The mine, one of the largest new gold projects in the world, is a joint venture with Goldcorp Inc, which rose 2 percent to C$37.17. Gold prices were up 0.7 percent.. "Commodities are likely to continue to bounce around. We're in an uneven economic recovery in Canada and the United States. The uneven recovery is going to create uneven moves in commodity prices," Fehr said.