* TSX falls 159.43 points, or 1.13 percent, to 13,963.68
* Nine of the 10 main groups lower
* Index's energy group the lone gainer, up 0.92 percent
* Materials sector down 2.54 pct, financials down 1.38 pct (Updates with details, quotes)
By Solarina Ho
TORONTO, Feb 22 (Reuters) - Toronto's main stock index fell steeply on Tuesday as unrest in Libya and elsewhere in the Middle East shook investor confidence.
Nearly all of the index's main groups suffered heavy losses, with the materials and financial groups suffering some of the biggest falls, down 2.54 percent and 1.38 percent, respectively. Most other groups fell more than 1 percent.
Fertilizer producer Potash Corp POT.TO took the biggest hit, falling 5.34 percent. Manulife Financial MFC.TO dropped 4.07 percent to C$18.14, while diversified miner Teck Resources TCKb.TO declined for a fifth straight session, tumbling 4.16 percent to C$52.07.
World stock markets fell as Libyan leader Muammar Gaddafi signaled defiance of a revolt against his 41-year rule. He appeared on state television and denied he had fled the country. The turmoil fueled a flight from risky assets. [ID:nLDE71L1CD] [MKTS/GLOB] [MET/L] [GOL/]
"There's a whole lot of uncertainty. If there's one thing that unnerves markets it's not knowing what the news is," Peter Chandler, senior vice-president and director at Canaccord Wealth Management.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 159.43 points, or 1.13 percent, at 13,963.68.
The index fell after a stellar run that saw it surge above the 14,000 mark for the first time since July 2008.
"As far as the general theme is concerned, the unrest in the Middle East is spreading and markets worldwide are pretty nervous," said Levente Mady, market strategist at Union Securities in Vancouver.
Other companies that suffered a significant retreat included Research In Motion RIM.TO, which was down 3.35 percent at C$66.61, Kinross Gold K.TO, which slid 5.54 percent to C$15.35, and First Quantum Minerals FM.TO, which tumbled 7.15 percent to C$117.72.
Oil and gas companies, along with a small handful of gold miners, bucked the negative trend. The index's energy group was up 0.92 percent. Imperial Oil IMO.TO jumped 3.91 percent to close at C$50.00, while Suncor Energy SU.TO gained 1.76 percent to end at C$45.06.
Oil prices held near 2-1/2 year highs due to worry about oil supply resulting from the Libyan crisis. [O/R]
"It's a mixed bag with the energy companies. Anybody who is a predominantly domestic producer, has been a big net beneficiary," Chandler said. "Anyone who's had significant exposure to overseas operations -- not so clear cut."
Nexen Inc NXY.TO helped limit the energy group's gains with its 2.18 percent retreat to C$24.64. Talisman Energy TLM.TO fell 1.11 percent to C$23.97.
Chandler said that fears of high energy prices often dampen economic sentiment, noting Tuesday's pullback after the market's recent rally.
"Having a pause to digest that move is not unusual, uncertain or unwelcome," he said. "It's probably not a bad thing that it's happening right now.
"We'll probably see some more profit-taking...some additional modest weakness in the market until we get some more clarity."
($1=$0.99 Canadian) (Additional reporting by Ka Yan Ng; editing by Peter Galloway)