TORONTO (Reuters) - The Toronto Stock Exchange’s main index slid more than 250 points in a broad retreat led by a drop in commodity prices, and amid worries over an economic slowdown fuelled by the high-risk, US subprime mortgage market.The S&P/TSX composite index closed down 255.55 points, or two percent, at 12,809.60.

All of the TSX index’s 10 main groups were lower, led by a 3.4 percent dive in the resource-laden materials group and a 1.4 percent drop in the oil and gas sector. The influential financial services sector, which makes up more than 30 percent of the index’s weight, slid 1.6 percent

The steep sell-off was due in part to mounting concerns on both sides of the border over US subprime mortgage lenders, which serve high-risk borrowers with poor credit histories at high interest rates.

“The fear is that the US housing situation may be, A, not over and, B, worse than was hoped recently,” said George Vasic, equity strategist at UBS Securities Canada.

“This is sort of the same catalyst we saw two weeks ago.”

It is the steepest retreat on the TSX since the benchmark index lost 2.7 percent on February 27, triggered by a sharp selloff in Chinese stocks amid worries about growth prospects in Asia and the United States.

Concerns over the US subprime mortgage market will not have a significant direct impact on the financials sector in Canada, said Michael Goldberg, an analyst at Desjardins Securities.

“There is no visible spill over,” he said. “The only direct exposure the (Canadian) banks could have is where they are lending money to (US) homebuilders and there is a softening in the housing market overall.”

Manulife Financial, dipped C$1.04, or 2.6 percent, to C$39.16, while Toronto-Dominion Bank fell C$1.20, or 1.7 percent, to C$68.25.

Market volume was 341 million shares worth C$6 billion.