* TSX finishes week down 0.8 pct, 3.25 pct in January
* Early rush into commodities unwinds on gloomy outlook
* Canada, U.S. economies show further contraction
* Canadian Oil Sands Trust gains on takeover rumors (Adds details)
TORONTO, Jan 30 (Reuters) - Toronto's main stock index fell on Friday in broad-based weakness, as economic worries weighed on most sectors after government data showed worsening conditions in both Canada and the United States.
The Canadian economy shrank more than expected in November, while the U.S. economy shrank in the fourth quarter at its fastest pace in nearly 27 years.
Uncertainty over the massive U.S. stimulus plan also sent a chill through financial sectors on both sides of the border.
"We're still talking about the bailout. It doesn't seem like it's getting good traction," said Francis Campeau, a broker at MF Global Canada.
In Toronto, the financial sector lost 0.21 percent. But that paled in comparison with losses suffered by the weighty energy and materials groups, which each dropped 1.3 percent, as both sectors failed to find support from firmer underlying commodity prices.
The three heavyweight sectors led six of the Toronto Stock Exchange's 10 main groups lower.
Earlier, before the market opened, the price of gold had jumped to a three-month high, while the price of crude also firmed, suggesting a strong start for the TSX.
Indeed, the TSX initially shot higher on the strength in commodities, but gradually retreated into negative territory as the economic jitters took over.
"After a while, things settled down and we came back to reality," said Joe Ismail, technical analyst at Maison Placements Canada.
The S&P/TSX composite index .GSPTSE closed down 67.86 points, or 0.8 percent, at 8,694.90, finishing the week 0.8 percent lower . It was down 3.25 percent for the month.
The index swung through a wide trading range on Friday, shooting 1.5 percent higher at the open, then falling as much as 2.1 percent by midafternoon.
"There's nothing to really spark a rally besides a short-covering rally," said Campeau.
Among the key issues driving the index lower were fertilizer giant Potash Corp (POT.TO), which lost 3.1 percent to C$92.25, while Barrick Gold (ABX.TO) fell 2.12 percent to C$46.14. Suncor Energy (SU.TO) dropped 2.3 percent to C$23.51.
Among advancers, the often-volatile Research in Motion RIM.TO was up 1 percent at C$67.78, while Canadian Oil Sands Trust COS_u.TO, was ahead 1.1 percent at C$18.70.
The trust, the biggest shareholder in Syncrude Canada Ltd, climbed for a second consecutive day on speculation it could become an acquisition target.
The news comes as investors place bets on the next moves in the oil sands region after French oil major Total SA (TOTF.PA) launched an unsolicited C$617 million bid for UTS Energy UTS.TO earlier this week. [ID:nN30374932]
The economic worries and uncertainty over Washington's $819 billion stimulus plan weighed on markets in the United States. The Dow Jones industrial average fell 148.15 points, or 1.82 percent, to 8,000.86 to mark its worst January ever. The Nasdaq .IXIC tumbled 31.42 points, or 2.08 percent, to 1,476.42.
$1=$1.23 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson