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* TSX index falls as financials hit by credit crunch fears
* Canadian Tire down after cuts earnings forecast
* Energy sector gains along with oil
By Leah Schnurr
TORONTO, Aug 7 (Reuters) - The Toronto Stock Exchange's main index finished lower on Thursday in a broad decline sparked by losses in the financial-services sector on nagging worries over more fallout from the credit crunch.
Canadian Tire CTCa.TO was the biggest drag on the index after it reported a lower quarterly profit and cut its earnings forecast for the year. Shares of the country's largest auto parts and household goods retailer shed 7.7 percent.
Among financials, Manulife Financial (MFC.TO) lost 3.7 percent after it said its profit fell, hurt by weak equity markets, a stronger Canadian dollar and tax-related provisions.
Banks got caught up by rising fears of more fallout from the U.S. credit crisis as insurer American International Group (AIG.N) reported a big loss after more writedowns.
"We saw a nice rally in the financials from the July 15 lows that was pretty much across the board. But I think every time the earnings come out, it seems to be some sort of a reality check," said Elvis Picardo, independent strategist in Vancouver, British Columbia.
The S&P/TSX composite index .GSPTSE closed down 68.34 points, or 0.51 percent, at 13,385.17 with six of its 10 main sectors lower and one flat.
Financials led the downside, losing 2.8 percent. Manulife was down C$1.38 at C$36.22, and Canadian Imperial Bank of Commerce (CM.TO) fell C$1.92, or 3.1 percent, to C$61.00.
Canadian Tire was the biggest net loser, shedding C$4.02 to C$48.40.
On the upside, the energy sector pushed higher as oil prices rose on anticipation that a pipeline attacked by Kurdish separatists in Turkey could remain shut for up to two weeks.
Canadian Natural Resources (CNQ.TO) rose C$4.37, or 5.5 percent, to C$83.65 after record operating profits offset concerns over new cost overruns and delays at its Horizon oil sands project.
"We're starting to see some results come out (of the energy sector) that are generally very positive," said Brian Pow, vice-president, research and equity analyst at Acumen Capital Partners in Calgary.
"Generally speaking, I think the outlook for most people is very positive and I think that's going to help the overall energy sector."
Elsewhere in the group, Suncor Energy (SU.TO) gained C$1.01, or 1.9 percent, to C$55.31, and the group overall rose 1 percent.
Among the latest slew of corporate results, Canada's No. 3 supermarket chain Metro Inc MRUa.TO said third-quarter profit rose and it plans to consolidate five Ontario foodstore banners under the Metro label. Metro's shares rose C$1.16, or 4.6 percent, to C$26.60.
Market volume was 341 million shares worth C$6.9 billion. Decliners outpaced advancers 758 to 748. The blue chip S&P/TSX 60 index .TSE60 closed down 5.31 points, or 0.66 percent, at 799.01.
In New York, stocks tumbled as AIG's quarterly loss and a cautious sales forecast from Wal-Mart (WMT.N) exacerbated worries about consumer spending and the financial sector's outlook.
The Dow Jones industrial average .DJI closed down 224.64 points, or 1.93 percent, at 11,431.43, and the Nasdaq composite index .IXIC slipped 22.64 points, or 0.95 percent, to 2,355.73. ($1=$1.05 Canadian) (Editing by Rob Wilson)