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* TSX down 52.66 pts, or 0.4 pct, to 12,224.19
* Italy, Greece debt issues weigh
* EU economic data sparks recession fears
* Materials drag, financials little changed (Adds details, analyst's comments)
By Jon Cook
TORONTO, Nov 14 (Reuters) - European recession fears pulled down Toronto's main stock index on Monday as poor economic data and uncertainty about the ability of Italy and Greece to deal with their debt woes weakened commodity prices.
Industrial production in the European Union's 17-country bloc fell 2 percent in September from August, overshadowing hopes that new leaders in Italy and Greece would prevent their economies from collapsing and avoid financial meltdown. [ID:nL5E7ME1LQ]
"It might auger for soft numbers in Q4 and (be a) further indication of a double dip in Europe," said Bob Gorman, chief portfolio strategist at TD Waterhouse.
Fears that Italy would not be able to repay its nearly 2 trillion euro debt ($2.7 trillion) resumed after a weak sale of Italian five-year bonds and after its 10-year bond yields rose closer to 7 percent, a level that had triggered previous bailouts for Ireland, Portugal and Greece. [MKTS/GLOB]
Ratcheting up the market's panic meter, German Chancellor Angela Merkel said Europe may be living through its toughest hour since World War Two. [ID:nL5E7MD0LU]
Merkel's statement was backed up by the latest Organisation for Economic Co-operation and Development index that showed readings for the world's top economies fell for the seventh straight month in September, hitting the lowest reading since December 2009. [ID:nL5E7ME1M6]
"There aren't a lot of positive data points surrounding Europe," said Gorman, adding "it may prove to be the case that this is the worst of times."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE fell 52.66 points, or 0.4 percent to 12,224.19 after briefly touching a session high of 12,342.03 early in the day.
The negative performance followed Friday's gains that saw the TSX jump more than 1 percent after Italy ushered out longtime leader Silvio Berlusconi and Greece welcomed former economist Lucas Papademos as its new prime minister.
Eight of the TSX's 10 main sectors were lower, led by the heavily weighted materials sector, which fell more than 1 percent as gold and commodity prices dipped. [GOL/] [COM/]
"Those things that you'd expect to respond most to signals of economic weakness were off the most," said Gorman.
Barrick Gold Corp (ABX.TO) was the sector's biggest drag, falling 1.1 percent to C$53.12.
Goldcorp (G.TO) shares slid 1.2 percent to C$53.91, even after Canada's second largest gold producer announced the Quebec government had cleared its Eleonore project, which is expected to boost the company's gold output by 600,000 ounces a year. [ID:nN1E7AD16R]
Energy issues fell 0.7 percent as oil prices were hit by the EU's slowdown in production. [O/R]
Canadian spot natural gas prices fell to their lowest level in a year as Alberta short-term supplies grew and mild temperatures limited heating demand. [ID:nN1E7AD1GU]
Canadian Natural Resources Inc (CNQ.TO) was the biggest laggard, dropping 0.8 percent to C$37.37.
After helping the TSX rally on Friday, Canadian base metals mining stocks sagged 0.7 percent, with only copper bucking the downward trend. [MET/L]
First Quantum Minerals (FM.TO) was among the subindex's top losers, dropping 2.2 percent to C$18.55.
Ivanhoe Mines (IVN.TO) was one of the few miners to rise, climbing 3.6 percent to C$21.49 after it reported a quarterly profit and said construction at its Oyu Tolgoi copper-gold project in Mongolia will be 70 percent complete by the end of 2011. [ID:nN1E7AD0CJ]
The Canadian financial sector, which has minimal exposure to European debt concerns, avoided a major drop and finished little changed.
"We're a long long way from any sort of resolution there," said Michael Sprung, president of Sprung & Co Investment Counsel. "This week, we're likely to see very reactionary markets, very volatile."
Toronto Dominion Bank (TD.TO) led the sector's marginal losses, falling 0.3 percent to C$72.22.
In lieu of improvements from Europe, investors are hoping for better news from Tuesday's U.S. October retail sales numbers, which Gorman said would be a harbinger of what to expect for the holiday shopping season.
(Editing by Rob Wilson)