* TSX down 124.84 points, or 1 pct, at 11,956.89.
* Energy, materials, financials weaker
* Sun Life falls 7 percent on earnings warning (Updates with details, commentary)
By Claire Sibonney
TORONTO, Oct 17 (Reuters) - Toronto's main stock index fell 1 percent on Monday on worries that an upcoming European summit would not yield a definitive plan to tackle the euro zone's debt crisis, and on an earnings warning from Sun Life Financial (SLF.TO).
The TSX's three biggest sectors - materials, energy and financials - were all weaker as commodity prices fell and domestic earnings expectations succumbed to worries about the global economy.
Among the heaviest decliners, Sun Life slumped 7.2 percent to C$24.55 after Canada's third largest insurer said it expects to post a loss in its third quarter due to unfavorable moves in both interest rates and equity markets. [ID:nN1E79G066]
No. 1 insurer Manulife Financial (MFC.TO) retreated in sympathy, falling 3.7 percent to C$12.45.
"The whole insurance sector is under pressure," said Francis Campeau, a broker at MF Global in Montreal.
With fears of a global recession in the air, investors were anxious about the outlook for Canada's biggest companies, as earnings season kicks off this week. [.TO/0]
Weighing on global sentiment, German Finance Minister Wolfgang Schaeuble said European governments would not resolve the region's debt crisis at a European Union summit scheduled for Oct. 23. [ID:nB4E7LA00A] [ID:nL5E7LH1GL]
"We've had an extremely long up-streak in October and I think there was too much hope priced in the market," said Campeau. "The market today is going back to reality."
At 10:40 a.m. (1440 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 124.84 points, or 1.03 percent, at 11,956.89.
Potash Corp (POT.TO) was most influential decliner, falling 3.2 percent to C$49.69. Suncor Energy (SU.TO) was close behind, off 2.1 percent at C$30.05.
Highlighting recent worries about the U.S. economy, a gauge of manufacturing in New York State contracted for the fifth month in a row in October as new orders were flat and the outlook for the coming months weakened. [ID:nN1E79G089]
Data also showed foreign purchases of Canadian securities slowed to C$7.9 billion ($7.8 billion) in August from C$12.1 billion in July, with most of the investment going to the bond market. [ID:nN1E79G0AP]
Research In Motion dropped 3.9 percent to C$23.32. The BlackBerry maker said it will offer free premium apps worth more than $100, in a bid to appease customers following its massive service disruption last week. [ID:nL3E7LH182]
($1=$1.02 Canadian) (Editing by Rob Wilson)