* TSX drops 26.91 points, or 0.22 percent, at 12,409.25 * Mining and industrial stocks weigh * Gloomy China, European data highlight global headwinds * Energy stocks rise after recent slide as crude rallies By Alastair Sharp TORONTO, Sept 20 (Reuters) - Canada's main stock index slipped on Thursday, pulled down by miners and the country's two big railways, as investors turned cautious after dismal economic data showed that global recovery is far from assured despite central bank monetary policy easing. The data signaled that China remains on track for a seventh straight quarter of slowing annualized growth, while U.S. manufacturing suffered its weakest quarter in three years, and conditions at European businesses worsened. "What's really moving some of the economically sensitive sectors today is the weak manufacturing report out of China overnight," said Youssef Zohny, portfolio manager at Stenner Investment Partners, part of Richardson GMP in Vancouver. "They continue to be in a contractionary stage on the manufacturing side, that's put a little bit of caution in the market," he said. The Toronto Stock Exchange's S&P/TSX composite index followed stock markets around the world lower, closing down 26.91 points, or 0.22 percent, at 12,409.25. The decline was the TSX's fourth straight, but it stayed above its closing level of last Thursday, when the U.S. Federal Reserve unveiled an aggressive stimulus package. Major industrial stocks led the session's decline, with Canadian National Railway Co losing 4.5 percent to C$87.44, and Canadian Pacific Railway Ltd off 2.6 percent at C$80.75. The drops in the shares of the Canadian railways came after the third-largest U.S. railway, Norfolk Southern Corp, warned on its third-quarter profit after the market close on Wednesday. "Norfolk and Southern's warning yesterday was a little unusual, it has probably cast a pall over some of the transportation stocks," said Paul Hand, managing director at RBC Capital Markets. Gold miners weighed as bullion prices retreated, while energy stocks were among the best performers after suffering sharp losses recently on declining crude oil prices. Both Zohny and Hand said they were unfazed by Thursday's pullback given the broader trajectory of the index, which has risen 5.5 percent in the last three months. "We've had a fairly strong liquidity-driven rally in the first two weeks of September, so it's not too surprising to see some investors take some profits," Zohny said. "Moods swinging back and forth...we've had pullbacks all the way along, intra-day or even for a week or two, but the market has continued to grind higher since June," RBC's Hand added. In China, manufacturing contracted in September, according to a private sector survey of factory managers. In the euro zone, a downturn in activity in the service sector steepened this month at the fastest pace since July 2009. And in the United States, the number of people filing new claims for jobless benefits fell last week, but the drop was from an upwardly revised number the previous weak, and the underlying tone of the report pointed to some weakening in the labor market. Shares in Centerra Gold Inc rose 4.9 percent to C$11.36 after the miner said it had restarted the mill at its Kumtor mine in Kyrgyzstan, ending a seven-week shutdown after the company ran out of stockpiled ore for processing.