TORONTO (Reuters) - The Toronto Stock Exchange's main index slumped nearly two percent yesterday, battered by tumbling resource shares that followed commodity prices lower.

Weak prices for oil and gold set the tone early in the day with the index tumbling more than 300 points shortly after the opening bell.

With just three out of 10 main sectors pushing lower, the materials sectors accounted for the bulk of the day's declines. Potash Corp of Saskatchewan was the biggest drag on the benchmark, falling 12.8 percent, while in the oil patch Canadian Natural Resources dropped 7.7 percent.

The price of oil fell to a three-month low as Tropical Storm Edouard hit the Texas coast without causing any major disruptions to US energy operations.

Oil settled down at $119.17 a barrel, after falling as low as $118 earlier.

The S&P/TSX composite index closed down 254.33 points, or 1.88 percent, at 13,242.2, after hitting a session low of 13,130.54.

Amid widespread losses in commodities, gold also tumbled as the US dollar firmed and the US Federal Reserve decided to hold interest rates steady.

On Bay Street, the materials and energy sectors shed 8.6 percent and five percent, respectively. Inmet Mining lost C$5.25, or 8.5 percent, to C$56.83, while Canadian Natural Resources was down C$6.28 to C$75.

Agriculture stocks also lagged, with fertilizer producer Potash Corp. falling C$26.49 to C$180.50, and rival Agrium sliding C$6.99, or 7.8 percent, to C$82.78.

The large financial sector benefited from the drop in resource groups as investors opted to put their money in banks instead. Bank of Montreal was up C$2.17, or 4.6 percent, at C$49.61, and Royal Bank of Canada gained C$1.58, or 3.4 percent, to C$48.30, while the sector overall added 2.5 percent.

The only other sector that fell was the utilities sector, which was off 0.4 percent.