* TSX down 35.75 pts, or 0.3 pct, at 11,307.30 * Touches 2012 low at 11,305.62 as energy, financials weigh * ECB may stop funding of some Greek banks By Jon Cook TORONTO, May 16 (Reuters) - Toronto's main stock index turned lower on Wednesday as early resource gains were erased following a report that the European Central Bank had stopped funding operations for some Greek banks rekindled fears about the euro zone's fragile banking sector. Euro-zone central bank sources said the ECB stopped monetary policy operations with some Greek banks as they have not been successfully recapitalized. Investors have been on tenterhooks over fears of a Greek exit from the euro zone and its knock-on effect on the global financial system. Market anxiety lingered as the problems in Europe were "not being resolved with any great vigor," said Robert McWhirter, president and portfolio manager at Selective Asset Management Inc. Canadian stocks pared early gains from encouraging U.S. economic data that showed U.S. industrial production posted its fastest growth in over a year in April. Separate housing numbers revealed a rebound in groundbreaking for new homes. Losses were led by the heavyweight energy sector, which dipped 0.4 percent. Prominent decliners included Suncor Energy, down 0.8 percent to C$27.44, Canadian Natural Resources, which fell 0.5 percent to C$29.28, and Cenovus Energy, sliding 0.9 to C$31.48. Financial stocks edged down 0.3 percent, shrugging off efforts by German Chancellor Angela Merkel and new French President Francois Hollande to quell talk of a possible Greek exit from the euro zone. Bank of Nova Scotia was the biggest laggard, down 0.5 percent to C$52.39. Top insurer Manulife Financial fell 2.5 percent to C$11.35. Around 1:37 p.m. (1737 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 35.75 points, or 0.3 percent, at 11,307.30. It touched a 2012 low at 11,305.62. The index was on track to fall for the tenth time in 11 sessions, shedding more than 8 percent so far this month. Gainers were led by the mining stocks. "The price of gold stocks relative to gold and metals is attractive," said McWhirter. Barrick Gold climbed 1 percent to C$35.60 and Yamana Gold rose 2.3 percent to C$13.15. Other miners on the upside included First Quantum Minerals, which spiked 5.1 percent to C$17.70, Inmet Mining, jumped 3.1 percent to C$46.95, and Osisko Mining Corp rose 5.3 percent to C$6.7. But Alacer Gold Corp shares fell 12.4 percent to C$5 after it raised its cash cost outlook for 2012 and two brokerages cut their price target on the stock. Earlier Wednesday, data showed Canadian factory sales blew past expectations in March with the biggest gain in six months on vigor in the oil industry, putting the economy back on a growth track after a surprise contraction in February. West Fraser Timber Co Ltd climbed 5.5 percent to C$45 after investment firm Raymond James raised the Canadian lumber company's stock to "outperform".