* Toronto index follows pattern of losses worldwide
* Energy issues under pressure as oil falls
* Manulife drags financials lower, analyst cuts target (Adds details)
TORONTO, Oct 27 (Reuters) - The Toronto Stock Exchange's main index was 1.8 percent lower on Monday morning, falling with other stock markets around the world as recession fears heightened, and hit again by falling prices for oil and other Canadian-produced commodities.
Japan's Nikkei stock index fell to a 26-year low on Monday and equity markets elsewhere in Asia and Europe dropped on fears that further coordinated action to calm markets may not be enough to fend off a global recession. [MKTS/GLOB] U.S. stocks gained briefly on a surprise increase in new home sales. [ID:nN27433980]
Toronto's oil and gas sector fell 3.4 percent. Oil prices were down at around $63 a barrel after hitting a 17-month low. [ID:nSYD351781] EnCana (ECA.TO) was among the big net loss decliners, down 4.1 percent at C$53.36.
The materials sector was off 1.3 percent as gold's appeal was dented by a surging U.S. dollar [ID:nLR559793]. Agnico-Eagle Mines (AEM.TO) lost 6.4 percent to C$31.71.
"We're following the markets in New York and Europe and trading down because of oil," said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.
"Those two things are dragging it down a bit today but not as bad as it was last week. It's kind of a muted down day I think."
Shortly after 10:20 a.m. (1420 GMT), the S&P/TSX composite index .GSPTSE was off 170.15 points, or 1.8 percent, at 9,123.94, with all of its 10 main groups lower. It was down 2 percent at the open.
Company outlooks remain a key focus this week with quarterly earnings reports due from Canadian Pacific Railway (CP.TO), pipeline company TransCanada (TRP.TO), oil explorer and producer Nexen NXY.TO, and Barrick Gold (ABX.TO).
Ibel said he was waiting for the banks to report their results to get a sense of the state of the economy. The big banks finish their quarter this month so their results will be disclosed in late November and early December.
"That will be a good litmus test as to how the Canadian economy as a whole is doing," Ibel said
Most banks were gaining in morning trade but insurer Manulife Financial (MFC.TO) dragged the group lower.
Genuity Capital Markets was the latest brokerage to cut its view on Manulife, lowering its share-price target for the big insurer to C$30 from C$35. Manulife, which fell 4 percent on Friday as several analysts downgraded their views, [ID:nN24523458] extended losses on Monday, down 2.3 percent at C$24.42. ($1=$1.27 Canadian) (Reporting by Ka Yan Ng; Editing by Peter Galloway)