* TSX down 61.89 points at 13,285.69
* Eight of 10 sectors lower (Updates with details, commentary)
By Claire Sibonney
TORONTO, Jan 25 (Reuters) - Toronto's main stock index retreated on Tuesday after Monday's broad rally, as a shock contraction in the struggling UK economy fanned fears about the pace of the global recovery and commodity prices fell.
Prices for oil and metals such as copper were hit by a double-whammy of the weak GDP data from Britain and by worries that monetary tightening in Asia could curb the appetite for commodities in those growing economies [ID:nL3E7CP04X] [ID:nLDE70O0IS].
As well, gold slid to near a three-month low as safe-haven demand evaporated and investors booked further profits from the 2010 rally. [O/R] [MET/L] [GOL/]
Resource issues weighed most heavily on the TSX index as energy shares lost 1.1 percent and the materials sector was 0.9 percent lower.
Among the biggest decliners were Canadian Natural Resources (CNQ.TO), off 1.5 percent at C$41.51, and Teck Resources TCKb.TO, which skidded 1.8 percent to C$58.72.
"What we're seeing is a bit of a selloff in commodities and I think it might be a bit of an extension of what we saw last week when commodities sold off following very strong economic results out of China," said Philip Petursson, director of the portfolio advisory group at MFC Global Investment Management.
Risk sentiment was also dampened by weaker U.S. equity indexes after some disappointing corporate earnings. [.N]
At 10:31 a.m. (1531 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 61.89 points, or 0.46 percent, at 13,285.69. Eight of the 10 main groups were softer.
"This rally is getting a little long in the tooth and it's difficult to find support for further upward momentum, and I think we're just seeing the start of some profit-taking," said Petursson.
Financials however were 0.1 percent firmer, supported by a report that some of the country's biggest banks have drawn up "living wills" showing how they would be dismantled in a crisis without the need for a government bailout. [ID:nN25254213]
"That might be a little bit more of a defensive move, rotating out of commodities and into financials which had underperformed in the back half of the year," Petursson added.
On the domestic earnings front, Canadian National Railway (CNR.TO) dropped 1 percent to C$67.75, as its underlying profit rose slightly less than expected due to higher fuel and other expenses, eating into a revenue gain. [ID:nN25255492]
Baffinland Iron Mines BIM.TO gained 0.7 percent to C$1.50 after a majority of shareholders tendered to a C$590 million takeover offer by ArcelorMittal Nunavut Iron to gain access to the miner's massive Arctic iron ore deposit. [ID:nASA01FBS]
$1=$1 Canadian Reporting by Claire Sibonney; editing by Rob Wilson