* Early rush into commodities unwinds on gloomy outlook
* Canada, U.S. economies show further contraction
* Golds among few bright spots
TORONTO, Jan 30 (Reuters) - Toronto’s main stock index turned negative on Friday morning as an early rush into commodity issues unwound and economic worries took hold.
Government data showed worsening economic conditions in Canada and the United States. The Canadian economy shrank more than expected in November, while the U.S. economy shrank in the fourth quarter at its fastest pace in nearly 27 years.
Earlier, before the market open, the price of gold had jumped to a three-month high, while the price of crude also firmed, suggesting a strong start for the TSX.
Indeed, the index initially shot 1.5 percent higher on the strength in commodities, but gradually retreated into negative territory as the economic jitters took over.
“After a while, things settled down and we came back to reality,” said Joe Ismail, technical analyst at Maison Placements Canada.
At 10:50 a.m. (1550 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 40.40 points, or 0.46 percent, at 8,722.36. Six of the TSX’s 10 subindexes were lower, including the three most heavily weighted sectors -- the financials, energy and materials.
Financials were down 1.1 percent, while the energy sector was 0.31 percent lower. The materials group slid 0.12 percent, though strength among gold producers, which benefited from investors’ looking for safe havens, limited the losses.
Among the key issues driving the index lower were Manulife Financial MFC.TO, down 2.1 percent at C$20.14, while fertilizer giant Potash Corp POT.TO lost 1.8 percent to C$93.48.
Advancers included Goldcorp G.TO, up 1.3 percent at C$36.58, while Canadian Oil Sands Trust COS_u.TO rose 4.4 percent to C$19.31, up strongly for a second session. Often-volatile Research in Motion RIM.TO was the most influential, up 3.9 percent at C$69.70.
$1=$1.24 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson