* TSX down 1.43 percent at 11,181.61
* Potash Corp drops more than 6 percent
* Suncor leads energy producers down (Adds details, quotes; updates prices)
By Claire Sibonney
TORONTO, Jan 28 (Reuters) - Toronto's main stock index hit its lowest level in more than two months on Thursday after disappointing results from market heavyweight Potash Corp (POT.TO) sent shares of the world's largest fertilizer maker tumbling.
Potash Corp of Saskatchewan led the index's decline, plunging 6.3 percent to C$109.24, after the company reported earnings well below market expectations. [ID:nN28196679]
"It's obviously a bit of a down-drag," said Bruce Latimer, a trader at Dundee Securities.
"A stock that carries that much weight on the Toronto Stock Exchange index is going to have an impact."
But it wasn't all bad news for producers of the key crop nutrient. Athabasca Potash API.TO, up C$1.59 or 23.9 percent at C$8.30, was one of the highest percentage gainers after global mining giant BHP Billiton BHP.AX(BLT.L) agreed to buy it for C$341 million ($323 million) in cash, expanding its asset base in the potash-rich province of Saskatchewan. [ID:nLDE60R1SH]
At 11:43 a.m. (1643 GMT) the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 166 points, or 1.43 percent, at 11,181.61, its lowest level since Nov. 6 when the index dropped to an intraday low of 11,098.66.
Also weighing the index down was Canada's largest oil and gas company, Suncor Energy (SU.TO), off 2.9 percent at C$33.71.
Oil prices rose above $74 early on Thursday, rebounding from six-week lows hit the previous day, as U.S. President Barack Obama's State of the Union speech helped ease market worries about the recovery. [O/R] But crude fell back again on a stronger U.S. dollar, soft demand and rising fuel stocks.
"The market is in pullback mode," said Fergal Smith, managing market strategist at Action Economics.
Smith said markets reacted well after Obama's speech on Wednesday and the U.S. Federal Reserve keeping its low interest rate policy intact, but there are still substantial headwinds.
Gold also gave up earlier gains as the euro declined against the U.S. dollar amid concerns over the heavy indebtedness of smaller euro zone economies such as Greece and Portugal. [GOL/]
"Sovereign debt risk remains a macro concern. So markets are finishing the week fairly choppy," said Smith.
$1=$1.06 Canadian Reporting by Claire Sibonney; editing by Rob Wilson