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* TSX off 164.18 points, or 1.51 percent, at 10,704.03
* Canada Liberals will vote against government
* Financials, down 2.7 pct, leads TSX lower (Updates to midafternoon)
TORONTO, Sept 1 (Reuters) - Toronto's main stock index sank on Tuesday, led by weakness in the weighty financial sector as investors locked in profits following a surprisingly strong earnings period for most of Canada's big banks last week.
The market largely shrugged off news that the country's official opposition Liberal Party will no longer support the minority Conservative government of Prime Minister Stephen Harper. [ID:nN01496127]
The broader financial sector, down 2.7 percent, led the Toronto index lower. The financials index saw strong gains last week when most of Canada's big banks reported stronger-than-expected results.
"There are likely some investors out there that are questioning near term valuations because the stocks are pricing in heavy expectations going forward," said Gareth Watson, Canadian equity advisor at ScotiaMcLeod.
"I wouldn't be surprised that you're just seeing some profit taking from last week's strong performance."
At 2:46 p.m. (1846 GMT), the S&P/TSX composite index .GSPTSE was off 164.18 points, or 1.51 percent, at 10,704.03, with nine of the index's 10 main groups lower.
The big energy sector dropped 1.6 percent as oil tumbled below $70 a barrel as economic worries sent investors to safer havens [ID:nL1558697], while materials sagged 0.3 percent.
The one bright sector on the index was information technology, up 0.88 percent as Research in Motion RIM.TORIMM.O was among the top influential gainers, rising 1.4 percent to C$81.47 after Credit Suisse raised the Blackberry maker to outperform.
Watson said the impact of election speculation is "likely limited" because the driving factors of the Toronto index tend to be energy and materials stocks, which are influence by global commodities markets. However, he said if there is any impact it could find its way into the financial sector.
"They are economically sensitive stocks and different political platforms will obviously develop into different policies which could impact various companies in Canada, but likely not to the degree that you're going to see massive material change in the stock market at this time," he said.
$1=$1.11 Canadian Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson