* TSX falls 0.66 percent to 13,259.63
* Eight of 10 main sectors lower (Adds details, commentary)
By Cameron French
TORONTO, Jan 25 (Reuters) - Toronto's main stock index closed sharply lower on Tuesday as a surprise contraction in Britain's economy combined with an interest rate hike in India to fuel fears of weaker commodity demand, hurting resource issues.
Prices for oil and copper weakened, pulling down the TSX energy and materials indexes by 1.5 percent and 0.6 percent, respectively, and dragging the broader composite index briefly to a two-week low.
The Indian rate hike comes as fears of rising inflation in Asia could prompt China could follow suit.
"Growth from China is strong, but you have worries about inflation and worries that they're going to cool the economy. And with India cooling their economy, demand for commodities may not be as hot as it was in 2010," said Barry Schwartz. a portfolio manager at Baskin Financial Services in Toronto.
The S&P/TSX composite index .GSPTSE finished the session down 87.95 points, or 0.66 percent, at 13,259.63, as all 10 TSX of its main subgroups ended lower.
Among energy stocks, Nexen Inc NXY.TO fell 2.6 percent to C$24.27, while Suncor Energy (SU.TO) retreated 1.8 percent to C$37.61.
Base metals miner Teck Resources TCKb.TO sank 1.2 percent to C$59.10, while Kinross Gold (K.TO) slid 1.7 percent to C$16.25 as the gold price continued its slide.
"Gold does really poorly in a rising interest rate environment," said Baskin.
$1=$1 Canadian Reporting by Cameron French