* TSX ends down 158.69 points, or 1.3 pct, at 11,923.04.
* Energy, materials, financials weaker
* Sun Life falls 9 percent on earnings warning (Updates to close)
By Claire Sibonney
TORONTO, Oct 17 (Reuters) - Toronto's main stock index fell steeply on Monday after Germany quashed hopes of a speedy breakthrough in the euro zone's debt crisis, and after Sun Life Financial SLF.TO warned it would report a big quarterly loss.
The TSX's three biggest sectors - materials, energy and financials - were off 1 to 2 percent as commodity prices fell and domestic earnings expectations succumbed to worries about the global economy.
Sun Life was the most influential decliner, slumping 9 percent to C$24.07 after Canada's third largest insurer said it expects to post a loss of C$621 million in the third quarter due to unfavorable moves in both interest rates and equity markets. [ID:nN1E79G066]
"Some people are surprised but there's been talk about the financial sector coming up with down earnings," said John Ing, president of Maison Placements Canada. "It comes at a time when these stocks have been under pressure."
No. 1 insurer Manulife Financial MFC.TO retreated in sympathy, falling 4.6 percent to C$12.34.
Compounding pressure on the financials were disappointing earnings from Wells Fargo & Co WFC.N, the fourth-largest U.S. bank, which fell 8.4 percent to $24.42 and was the biggest weight on the S&P 500.
With fears of a global recession in the air, investors were anxious about the outlook for Canada's biggest companies, as earnings season kicks off this week. [.TO/O]
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 158.69 points, or 1.31 percent, at 11,923.04.
Energy shares were among the heaviest drags after an aggressive run-up last week. Among the top decliners, Suncor Energy SU.TO fell 3 percent to C$29.76 and Canadian Natural Resources CNQ.TO dropped 3 percent to C$31.96.
In individual company news, Research In Motion fell 5.6 percent to C$22.90 as an offer of free games, translation software or other apps to compensate BlackBerry users for last week's prolonged outage failed to impress investors. [ID:nN1E79G148]
Weighing on broader sentiment, German Finance Minister Wolfgang Schaeuble said European Union governments would adopt a five-point plan at the Brussels summit on Oct. 23, but cautioned "we won't have a definitive solution this weekend." [ID:nL5E7LH1GL]
Optimism that the euro zone was making progress in resolving its sovereign debt crisis had helped push the TSX to notch its best week since October 2009 on Friday.
"We've had an extremely long up-streak in October and I think there was too much hope priced in the market," said Francis Campeau, a broker at MF Global in Montreal.
"The market today is going back to reality."
Highlighting recent worries about the U.S. economy, a gauge of manufacturing in New York State contracted for the fifth month in a row in October as new orders were flat and the outlook for the coming months weakened. [ID:nN1E79G0EO]
Data also showed foreign purchases of Canadian securities slowed to C$7.9 billion in August from C$12.1 billion in July, with most of the investment going to the bond market. [ID:nN1E79G0AP]
($1=$1.02 Canadian) (Editing by Rob Wilson)