TORONTO (Reuters) - Toronto's main stock index closed lower yesterday as financial shares dropped after Manulife Financial Corp. posted a steep quarterly loss.

Manulife, Canada's largest life insurer, was the most heavily traded stock on the TSX and fell 11.3 percent to C$14.20.

Its big loss came after Sun Life Financial, Canada's No.3 insurer, said late on Wednesday that its net profit was cut by more than half by turbulent market conditions in the second quarter.

Sun Life was down 4.7 percent at C$27.27.

Analysts said the market's reaction to the results was a reflection of its fragility as it worries about the possibility of a double-dip recession.

"Any kind of news that points toward that, traders get nervous," said Aaron Fennell, senior market strategist at Lind-Waldock Canada.

"Traders are very sensitive to things like earnings, anything that can indicate financial firms are not able to generate profit."

The Toronto Stock Exchange's S&P/TSX composite index finished the day down 70.28 points, or 0.59 percent, at 11,774.77. The index's financial group, down 2.2 percent, led the way lower.

Analysts said the TSX was also undermined by US market sentiment, which was bruised yesterday by disappointment over US weekly jobless claims data.

Markets are now focused on the more comprehensive US July jobs report and Canadian employment data for the same month, both due this morning.

Other major decliners included Suncor Energy, down 0.8 percent at C$34.18, and Teck Resources, which dropped 3.7 percent to C$35.84.

Research In Motion fell 2.2 percent to C$53.06 after the BlackBerry maker faced more demands to open its smartphones to government scrutiny as Lebanon joined India, Saudi Arabia and the UAE in raising concerns over security.