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TSX plunges as commodities fall

TORONTO (Reuters) - Toronto's main stock index sank yesterday as inflation worries in China drove expectations of an interest-rate hike, dragging down commodity prices and the resource-heavy TSX.

Oil heavyweight Suncor Energy fell 3.13 percent, to C$34.93 while miner Barrick Gold was down 1.57 percent at C$51.25.

"The market is looking at action in China yesterday. The Chinese index was down about five percent," said Youssef Zohny, an associate portfolio manager with Van Arbor Asset Management in Vancouver.

"(Inflation) came in much hotter than expected, so it seems like there's going to be some tightening in China. That's essentially what's driving the market today."

The Toronto Stock Exchange's S&P/TSX composite index finished down 185.50 points, or 1.43 percent, at 12,749.24. All 10 of its main groups finished in the red.

The index retreated 1.35 percent on the week.

The materials sector, home to major miners, was down 1.9 percent, with Goldcorp off 1.22 percent at C$46.85. Base-metals miner Teck Resources was down 1.47 percent at C$49.61.

Energy stocks gave back 1.75 percent. Canadian Natural Resources fell nearly two percent to C$39.76, while Encana Corp slid 2.26 percent to C$29.42.

Crude prices fell more than three percent as China worries triggered profit-taking following gains of nearly eight percent in the last two weeks. Gold prices took their biggest hit in four months, sliding three percent.

"There's been a number of headwinds for commodities over the past few days ... it's really the sore spot of the market right now," said Jean-Francois Dion, vice-president and portfolio adviser of Canadian Equities at RBC Dominion Securities.

Concerns over sovereign debt in the euro zone also gave investors some pause.

"In general, you're just seeing risk aversion from Europe and China," Zohny said, noting some profit-taking following strong rallies by a number of stocks over the last few weeks.

The financial group, another index powerhouse, was down 1.17 percent with all the major banks firmly in the red. Royal Bank of Canada fell 1.27 percent to C$53.02 and the Bank of Nova Scotia slipped 1.3 percent to C$53.15.