TORONTO (Reuters) - Toronto's main stock index snapped a three-session winning streak yesterday, tumbling more than one percent as rising yields on US government debt fanned fears of higher borrowing costs, which delay an economic recovery.

The heavily weighted financials sector dropped 2.9 percent, following a retreat by US equity markets, as the surging bond yields fuelled concerns that consumers and businesses could face higher charges for mortgages and other loans.

"When yields start rising, and rising sharply, basically what that means for the stock market is that all the companies and all the people that are spending money ... are looking at a higher cost of money. That is not good for everyone," said Levente Mady, a market strategist at Union Securities in Vancouver.

Typically, stocks and bonds move in opposite directions, as government debt is often bought as a safe haven when investors posses little appetite for riskier equities.

But the rising yields were enough to prompt a sell-off in stocks, said Mady.

"If yields continues to rise that is going to be a major hurdle for stock markets to continue to do better," said Mady, noting yields are rising, in part, on supply concerns.

Analysts also said bank shares gave up some recent gains, while the materials group fell as metal prices sagged.

The heavily weighted financials sector dropped 2.9 percent after gaining 4.6 percent on Tuesday when Bank of Montreal posted a stronger quarterly profit than expected.

Banks were among the main movers to the down side yesterday, including BMO, down 4.4 percent at C$41.79. Royal Bank of Canada sagged 2.3 percent to C$44.00, while Toronto-Dominion Bank fell 3.3 percent to C$50.28 and Bank of Nova Scotia was down 2.7 percent at C$37.75.

"The financials are lower across the board. It's a little consolidation," said Bruce Latimer, a trader at Dundee Securities. "You've still got more of them to report this week so they may have gotten ahead of themselves."

Laurentian Bank of Canada was the latest to report results, which came in below market expectations yesterday. Its shares fell 5 percent to C$29.22.

The S&P/TSX composite index was down 143.74 points, or 1.4 percent, at 10,142.16, with seven of the 10 main groups lower.