TORONTO (Reuters) - Toronto's main stock index sank yesterday to its lowest level in seven weeks as resource issues slumped on falling oil and base metal prices, and as concerns grew over the global financial crisis.

The financial services sector led the TSX lower, closing down 6.4 percent, its steepest one-day percentage loss since the beginning of December.

Heavily weighted stocks on the downside included insurer Manulife Financial, down 10.6 percent to C$15.67, and Royal Bank of Canada, which fell 5.5 percent to C$28.15.

Further concerns about the financial sector were sparked after two leading agencies, including a report from Moody's Investors Service, warned about growing risks to European banks as the recession deepens. That added to an already gloomy tone in the sector, said Francis Campeau, broker at MF Global Canada, in Montreal, adding that there appear to be "no buying catalysts".

"Going forward, we expect banks' income to decrease," he said. "Forward earnings per share are getting repriced and current dividends are unsustainable."

The energy group also pressured the TSX lower, falling five percent as the price of oil dropped seven percent to below $35 a barrel on demand concerns.

EnCana Corp fell 5.2 percent to C$51.30, while Suncor Energy dropped seven percent to C$22.82.

The Toronto Stock Exchange's S&P/TSX composite index closed down 299.40 points, or 3.45 percent, at 8,378.70, with nine of its 10 main sectors lower. At one point, the resource-laden index touched its lowest level since December 29. On Monday, the market was closed for a public holiday.

The lone sector in positive territory was the resource-laden materials group, up 0.5 percent, as gold prices got a boost as investors sought refuge from economic gloom.

Goldcorp climbed 3.4 percent to C$40.45, while Barrick Gold rose 1.1 percent to C$47.19. Kinross shot up 4.6 percent to C$24.39.

Grim US housing and factory data helped to dampen the mood in North American equity markets, while market sentiment was also hit by data that showed Japan's economy sank deeper into recession in the fourth quarter.