* TSX down 123.16 points, or 1.12 percent, at 10,854.81
* China stock market selloff spreads to North America
* Energy, materials shares lead TSX lower (Adds details, quote)
By Jennifer Kwan
TORONTO, Aug 31 (Reuters) - Toronto’s main stock market index sank on Monday morning, pressured by a big drop in Chinese equities, which stoked concern about the pace of economic recovery and undercut commodity prices.
Among heavyweight decliners were Suncor Energy (SU.TO), down 1.1 percent at C$34.03, Bank of Nova Scotia (BNS.TO), down 1 percent at C$45.86, and Teck Resources TCKb.TO, which sank 2.4 percent to C$26.90.
China’s key stock index .SSEC fell 6.74 percent on Monday to a three-month closing low, logging its second-biggest monthly loss in 15 years [ID:nBJD002975], as the rise stock valuations was seen as outpacing improvements in corporate earnings.
Chinese stocks have been seen as a barometer of the state of global economic recovery recently and their weakness rattled investor sentiment, knocking European and North American stock markets lower.
“The main story today is the news out of China that the Shanghai index was very weak,” said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia. [MKTS/GLOB]
“That’s pushing down commodities worldwide as well as equity markets. We’re bearing the brunt, of course, because we’re overweight oil and other commodities.”
Oil fell toward around $70 a barrel on Monday [ID:nSYD487149], while gold and base metals prices also sagged. Oil company Canadian Natural Resources (CNQ.TO) fell 2.3 percent to C$62.95, and miner First Quantum Minerals (FM.TO) tumbled 5.9 percent to C$63.04.
The Toronto index’s energy sector fell 1.6 percent, the materials group shed 1.9 percent, and financials slipped 1 percent.
The market was also pressured by Canadian gross domestic product data released on Monday, Ibel said.
Canada’s economy shrank overall in the second quarter, but took a small step toward recovery in June. [ID:nN31431924]
At 10:00 a.m. (1400 GMT), the S&P/TSX composite index .GSPTSE was down 123.16 points, or 1.12 percent, at 10,854.81, with all of its 10 main groups lower.
$1=$1.10 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway