* TSX down 0.45 percent at 9,790.17
* Materials group, up 0.5 percent
* Agrium shares up 0.8 percent on CF takeover optimism (Adds details, quote)
By Jennifer Kwan
TORONTO, June 23 (Reuters) - Toronto’s main stock index dropped on Tuesday morning as U.S. economic data splashed more cold water on prospects for the global economy.
The TSX index’s financial group fell 1.4 percent, with Royal Bank of Canada RY.TO down 2.2 percent at C$44.09, while Manulife Financial MFC.TO sank 2.5 percent to C$19.92.
The index had opened slightly higher on firmer commodities prices, but followed U.S. equities lower after data showed sales of previously owned homes rose at a slower-than-expected pace in May.[ID:nN23475172]
Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia, said he would not be surprised if the market pulled back further following the runup from the index’s March lows.
“I think pretty much the consensus throughout the market is that the runup we’ve had has been too sharp too fast,” he said. “It needs to correct at some point.”
At 10:35 a.m. (1435 GMT), the S&P/TSX composite index .GSPTSE was down 44.01 points, or 0.45 percent, at 9,790.17, with nine of its 10 main groups lower.
The TSX also switched tracks as the price of oil CLc1 and gold prices headed lower.
The index’s materials group, up 0.5 percent, was the sole sector that managed to hang on to gains, with Barrick Gold ABX.TO up 0.5 percent at C$36.87, while Goldcorp G.TO rose 0.4 percent to C$37.77.
The TSX index’s energy group, which was up at the start of the session, dipped into the red and by midmorning down 0.3 percent.
Shares of fertilizer producer Agrium Inc AGU.TO were up 0.8 percent at C$45.29. Agrium said on Tuesday it would push ahead with its hostile takeover bid for rival CF Industries Inc CF.N after the offer was backed by holders of more than 60 percent of CF’s stock. [ID:N23539879]
$1=$1.16 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway