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* TSX down 85.48 points at 11,964.33
* Materials, energy lead index lower
By Claire Sibonney
TORONTO, March 19 (Reuters) - Toronto's main stock index slipped back below the 12,000 mark on Friday morning as soft commodity prices hit energy and metal producers, and unexpectedly strong inflation data increased rate hike fears.
Oil and gold prices slipped against a strengthening safe-haven U.S. dollar on worries over Greece's debt.[O/R] [GOL/]
Meanwhile, stronger than expected domestic inflation data increased expectations the Bank of Canada will hike interest rates sooner rather than later this year. [ID:nN19500487]
Higher rates are typically negative for stocks because they slow economic growth and increase borrowing costs for companies.
At 10:28 a.m. (1428 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 85.48 points, or 0.71 percent, at 11,954.33.
On Wednesday, the index touched a 17-month high of 12,122.47.
"I think the market has gotten itself into a situation where the valuations short-term have become quite stretched," said Rick Hutcheon, president and CEO at RKH Investments.
"I think the market needs to catch its breath a little bit and I wouldn't be surprised if we see some erosion in the next week or two," Hutcheon said.
Heavyweight decliners in the materials sector included Barrick Gold Corp (ABX.TO), the world's largest gold producer, down 1.3 percent at C$39.79 and First Quantum Minerals (FM.TO), which fell 2.1 percent to C$87.62.
$1=$1.01 Canadian Reporting by Claire Sibonney; editing by Rob Wilson