* TSX ends down 135.85 points, or 1.04 pct, at 12,916.63
* Index touches highest level since September 2008
* Nine of 10 main groups lower as investors take profits (Adds details, quotes)
By Jennifer Kwan
TORONTO, Nov 9 (Reuters) - Toronto's main stock index ended lower on Tuesday after touching a two-year high earlier in the session, as a steep rise by the U.S. dollar helped push commodity prices lower.
Spot gold XAU= soared to a record high for a fourth day running, touching above $1,424 an ounce, but retreated sharply by day's end as the stronger greenback prompted heavy profit-taking by investors. [GOL/]
Barrick Gold (ABX.TO) sank 0.5 percent to C$51.25, while Yamana Gold YRI.TO dropped 2 percent to C$11.69, helping the TSX's gold subgroup slide 2.7 percent. The broader materials sector, home to miners and fertilizer companies, was down 2.4 percent.
"The market has really been focused the past few days on the metals side of things, particularly as gold made all-time highs again today," said Aaron Fennell, senior market strategist at Lind-Waldock Canada. "But today, it dramatically turned around from that and I think there is a change in perspective."
Gold sank on a firm U.S. currency, which rose in part after being beaten down ahead of the Federal Reserve's decision to pump more money into the struggling U.S. economy, said Fennell.
Analysts also said the greenback got a lift as investors unwound U.S. dollar short positions, while investors flocked to the safety of the greenback on concerns about euro zone debt.
The euro faltered against the U.S. dollar for a third straight session on Tuesday as debt risks grew in the periphery of the euro zone, spilling over into foreign exchange markets and driving up the greenback. [FRX/]
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE finished down 135.85 points, or 1.04 percent, at 12,916.63, snapping three days of gains. Earlier, the index hugged 13,114.05, its strongest level since Sept. 8, 2008.
The blue chip S&P/TSX 60 index .TSE60 closed 6.6 points lower, or 0.9 percent, at 740.32.
Joe Ismail, a technical analyst at Maison Placements Canada, said several technical indicators suggest a further pullback looms.
"The market is way overbought and overextended in this run," said Ismail. He noted the TSX index could fall toward its 200-day moving average of just under 12,000 points.
Nine of the TSX index's main sectors were lower. The information technology group rose 1.7 percent, helped by CGI Group (GIBa.TO) which surged 9.9 percent to C$17.07 after Canada's biggest technology outsourcing and consulting company posted a higher quarterly profit. [ID:nSGE6A80KY]
Elsewhere, Silver Wheaton SLW.TO said on Tuesday it might start issuing a small dividend in early 2011, after third-quarter profits more than doubled on strong silver prices. However, its shares got caught up in the general market mood, falling 8 percent to C$32.53. [ID:nN08242179]
$1=$1.01 Canadian Reporting by Jennifer Kwan; editing by Rob Wilson