* TSX drops 0.8 percent to 10,738.50
* U.S. Aug consumer confidence at lowest point since March
* Energy, materials groups the heaviest decliners (Adds details)
By Ka Yan Ng
TORONTO, Aug 14 (Reuters) - Toronto’s main stock index fell sharply on Friday morning as darkening U.S. consumer confidence rattled the market and softened commodities.
Figures that showed U.S. consumer confidence fell in early August to its lowest level since March [ID:nN14294408] undermined the market’s faith in economic recovery and helped push seven of the TSX index’s 10 main groups into the red.
The confidence data also hit prices of key commodities, putting pressure on the resource-heavy index. Oil fell below $69 a barrel, giving up earlier gains, while gold also fell after it was up near $960 per ounce.
The energy group lost 1.47 percent, while materials shed 1.5 percent.
The confidence data added to questions about the U.S. economic recovery after U.S. retail sales earlier in the week also disappointed, just days after the U.S. Federal Reserve said it saw some relief from recession.
“This was the litmus test for the markets at the tail end of the week and it failed. Lo and behold despite all the talk about green shoots, consumers aren’t confident,” said Andrew Pyle, wealth advisor at Scotia McLeod in Peterborough, Ontario.
“So the market now I think has been forced to look at itself in the mirror and realize that it has become over exuberant on fundamentals that really aren’t there unless people are going to spend and buy. The confidence numbers suggest that isn’t going to be the case, at least in August.”
At 11:00 a.m. (1500 GMT), the S&P/TSX composite index .GSPTSE was down 87.06 points, or 0.8 percent, at 10,738.50.
On the upside, Gildan Activewear (GIL.TO) added to Thursday’s 7.1 percent gain after RBC Capital Markets raised its price target on the T-shirt maker. Gildan rose 7.55 percent to C$21.22.
$1=$1.09 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway