* TSX falls 28.68 points, or 0.23 percent, to 12,512.09
* Nine of 10 main sectors decline
* Gold stocks decline with falling gold prices
By John Tilak
TORONTO, Jan 3 (Reuters) - Canada's main stock index fell on
Thursday, with lower resource prices weighing on material and
energy stocks, as investors fretted about looming budget battles
between U.S. lawmakers in the wake of the "fiscal cliff" deal.
U.S. President Barack Obama and congressional Republicans
face even bigger budget battles in the next two months after a
hard-fought "fiscal cliff" deal narrowly averted potentially
devastating austerity measures in the way of tax increases and
spending cuts.
"The next battle is going to be the debt ceiling, and then
after that it's going to be the sequester. The debt ceiling
debate especially sounds like it's going to be fairly nasty,"
said Ian Nakamoto, director of research at MacDougall,
MacDougall & MacTier.
The Toronto Stock Exchange's S&P/TSX composite index
was down 28.68 points, or 0.23 percent, at 12,512.09.
Nine of the 10 main sectors of the index were in the red.
The materials sector, which includes mining stocks, played
the biggest role in leading the index lower. The group lost 0.3
percent, tracking a decline in gold prices.
Goldcorp Inc slipped 1 percent to C$36.60, and
Barrick Gold Corp gave back 0.5 percent to C$34.92.
Oil fell to $112 a barrel as rising oil supply and worries
of U.S. budget battles offset upbeat economic data from China.
China's official purchasing managers' index (PMI) for the
non-manufacturing sector rose to a four-month high in December.
Investors are looking at "the sustainability of the data
from China," Nakamoto said. "Is it just a short-term phenomenon
or is it going to be long-lasting, maybe over the next 3 to 6
months?"
The energy sector dropped 0.2 percent. Suncor Energy Inc
was down 0.8 percent, at C$33.13.
In company news, an Imperial Oil Ltd spokesman said
on Wednesday the company's Kearl oil sands project in northern
Alberta could start commercial production in the coming weeks
after a previous target was delayed from the end of December.
Imperial shares fell 0.06 percent to C$42.42.