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* TSX down 1.3 percent at 10,340.37
* Financials drop 2 percent
* "Window-dressing" at end of quarter adds to volatility
(Adds details, quotes)
By Jennifer Kwan and Nina Lex
TORONTO, June 30 (Reuters) - Toronto's main stock index sank on Tuesday morning after a choppy start, pulled down in part by weakness in financial shares after U.S. data showed a drop in consumer confidence in June.
The drop in confidence, which came after two straight months of gains, dented hopes that the North American economy was regaining its stride after months of recession. [ID:nN30263841]
The Toronto index, which was little changed ahead of the data, quickly dropped after the reading soon after the open, said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.
"The fact that consumer confidence is lower means people are going to continue saving more," he said.
"In a nutshell, that doesn't bode well for a recovery. Everybody is waiting for the consumer to start buying and coming back to the stores."
At 10:34 a.m. (1434 GMT), the S&P/TSX composite index .GSPTSE was down 136.40 points, 1.3 percent, at 10,340.37. Seven of its 10 main groups dropped.
The TSX's big energy sector, which had provided much of the support at the start of the session, reversed course and fell 1.5 percent as the price of oil dropped below $70 a barrel. Canadian Natural Resources (CNQ.TO) sank 1.2 percent to C$60.25.
The Toronto index was expected to be weak given the recent run in the past five sessions, said Francis Campeau, broker at MF Global Canada in Montreal.
Analysts said trade could turn choppy on Tuesday, the last day of the month and quarter as fund managers "window-dress" their portfolios by selling losing stocks and scooping up the gainers, adding to volatility.
"The highlights are today that it's the end of the month and also the end of the quarter and the end of the first six months," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
Canadian markets are closed on Wednesday for the Canada Day holiday, while U.S. markets are closed on Friday for the Independence Day holiday.
$1=$1.16 Canadian Reporting by Jennifer Kwan and Nina Lex; Editing by Frank McGurty