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* TSX closes below 9,000 for first time since Dec. 2004
* Energy sector falls 9.2 percent as oil drops below $64
* Materials sector tumbles 11 percent
* Manulife falls 15 pct on capital, profit outlook (Adds details)
By Jennifer Kwan
TORONTO, Oct 27 (Reuters) - The Toronto Stock Exchange's main index tumbled on Monday to close below 9,000 for the first time since December 2004 as worries intensified that the faltering global economy will further erode markets for Canadian-produced commodities such as oil and metals.
In its second biggest percent drop in history, according to operator TMX Group X.TO, the S&P/TSX composite index .GSPTSE lost more than 300 points in the last half hour of trade, and closed down 756.75 points, or 8.14 percent, at 8,537.34, with all of its 10 main groups lower.
The benchmark index is down 27 percent so far this month.
Toronto's retreat was far steeper than that seen on U.S. markets due to its heavy weighting in commodity-related issues, said Andrew Pyle, investment adviser at ScotiaMcLeod in Peterborough, Ontario.
"The continued pressure on the commodity prices remains a theme and that's really coming from this realization that the global contagion of weaker economic growth in North America is becoming more pervasive. In other words, it's hitting more countries," Pyle said
"At the end of the day, you stack up the TSX to the S&P and we still have much greater weighting and sensitivity to commodity prices."
The energy sector fell 9.2 percent as oil prices settled at an 18-month low at $63.22 a barrel on worries over weakening demand. [ID:nSYD351781] Canadian Natural Resources Ltd (CNQ.TO) was down 10.5 percent at C$46.55, while EnCana fell 8.5 percent to C$51.04
The materials sector, home to mining and fertilizer companies, fell 11 percent, with Agnico-Eagle Mines Ltd (AEM.TO) dropping 18.8 percent to C$27.50.
"The market reflects what it thinks of the future and at this point it's looking for more demand erosion," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd in Calgary.
"They're probably still trying to bake that into the stock prices, notwithstanding what the commodities are doing on a very short-term basis, like from a day-to-day basis. From the longer term perspective, I think the market is still nervous about the commodity stocks right now."
The financial services sector was down 8.8 percent, hit by fears of a slackening economy. Manulife Financial was down 15.3 percent at C$21.17, its lowest level since January 2004, after analysts said that tumbling equity markets may force it to raise capital. [ID:nN27322340] Its shares are down 45 percent so far this month.
Toronto's plunge followed big drops on equity markets in Asia and Europe on Monday on fears that further co-ordinated action to calm markets may not be enough to fend off a global recession. ($1=$1.30 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)