* S&P/TSX index down 60.74 points, or 0.47 pct, at 12,761.09 * Eight of 10 main sectors decline * Magna shares up more than 5 percent after results By John Tilak TORONTO, March 1 (Reuters) - Canada's main stock index fell on Friday, as energy and materials shares followed commodity prices lower and Washington failed to cut a deal to prevent U.S. budget cuts that could threaten the recovery of Canada's largest trading partner. Investor sentiment was further dampened by weak economic data from Europe and the political stalemate in Italy. Meanwhile, data showed Canada's economy grew at a sluggish pace in the final quarter of 2012 after a similarly disappointing third quarter. The U.S. government headed for deep belt-tightening, known as "sequestration," as President Barack Obama met Republican and Democratic leaders at the White House in search of a last-minute alternative. "This scares the market. People are nervous," said Sal Masionis, stockbroker at Brant Securities. The negotiations to arrive at a deal could drag on for weeks and be an overhang for the market, he added. The Toronto Stock Exchange's S&P/TSX composite index was down 60.74 points, or 0.47 percent, at 12,761.09. Eight of the 10 main sectors on the index were in the red. The gloomy economic news weighed on commodity prices and pulled resource stocks lower. Energy stocks tumbled 1.2 percent, tracking a decline in oil prices. Canadian Natural Resources Ltd fell 1.9 percent to C$30.92, and Suncor Energy Inc gave back 1.2 percent to C$30.88. The materials sector, which includes mining stocks, fell nearly 1 percent. Gold prices extended their fall, following a string of monthly losses. Barrick Gold Corp dropped 1.8 percent to C$30.72. Financials, the index's weightiest sector, were little changed. "People are seeking safe havens," Masionis said. "The banks are probably the safest port in the storm." Four of Canada's top banks, including Royal Bank of Canada and Toronto-Dominion Bank, posted stronger-than-expected quarterly profits on Thursday. In company news, Magna International Inc reported a 12.5 percent rise in profit on strong performance at its North American business. The auto-parts maker's shares rose 5.3 percent to C$57.75. The stock was one of the biggest individual positive influences on the index.