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* TSX closes down 77.68 pts, or 0.66 pct, at 11,671.44
* Banking shares lead index lower
* Eight of the index's 10 main groups down (Updates to close, adds details, quotes)
By Claire Sibonney
TORONTO, May 28 (Reuters) - Toronto's main stock index ended lower on Friday, after weak U.S. data and a downgrade of Spain's credit rating undermined confidence and investors moved to the sidelines ahead of a long weekend in the United States.
U.S. equities also extended earlier losses after Fitch Ratings cut Spain by one notch from its AAA status, reigniting worries about euro-zone debt issues, and sending influential oil and metal prices down. [.N] [O/R] [MET/L]
"Today is one of those days when a confluence of factors has combined to make things negative yet again for the markets," said Elvis Picardo, an analyst and strategist at Global Securities in Vancouver.
Besides developments in the euro zone, Picardo said risk-averse investors are also paying close attention to the prospect of a Korean military conflict.
"Sentiment is turning on a dime on a day to day basis."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 77.68 points, or 0.66 percent, at 11,671.44, with eight of its 10 main groups lower. Still, the index finished the week 1.3 percent higher.
The financial sector, down 1.4 percent, was the hardest hit TSX group on Friday after some of Canada's biggest banks reported results this week that missed high market expectations.
"Another punishing day for the banks ... they have the best balance sheets of any banks in the world and yet we're selling them off because they missed earnings by a few pennies," said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services.
Other heavyweight decliners included Barrick Gold Corp (ABX.TO), off 0.8 percent at C$44.25, Teck Resources TCKb.TO, down 2.7 percent to C$35.80, and BlackBerry maker Research in Motion RIM.TO, down 1.5 percent at C$63.79.
North American equities slipped from positive territory earlier in the day after data showed U.S. consumer spending was unexpectedly flat last month and growth in business activity in the Midwest slowed.
"We're heading into a long weekend, with U.S. markets closed on Monday, and we've got a very choppy and fragile market," said Schwartz.
Monday is the Memorial Day holiday in the United States.
"If there's any bad news out of Spain or Korea, or anywhere in the euro zone (over the weekend), then people don't want to be locked into stocks."
$1=$1.05 Canadian Editing by Rob Wilson