(Updates to late afternoon)
* TSX down 41 points, or 0.3 pct, at 12,406.68
* Energy and materials fall; financials edge up
By Claire Sibonney
TORONTO, Oct 5 (Reuters) - Toronto's main stock index backed away from its highest level in nearly three weeks on Friday as concerns about weakness in the global economy hurt commodity prices, countering unexpectedly strong North American jobs data.
U.S. crude oil futures settled down nearly $2 a barrel as signs this week of the slowing manufacturing and services sectors in Europe and China continued to weigh on investor sentiment.
Energy stocks followed suit, falling 0.9 percent. The biggest laggards included Canadian Natural Resources
down 1.4 percent to C$30.28, Suncor Energy
, down 0.8 percent to C$32.88 and Encana Corp , off 2.5 percent to C$21.30.
"Concerns remain about the outlook for global growth, particularly demand out of high consumption emerging markets like China, so we've gotten a little bit of weakness there," said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis.
"Added to that is a strengthening U.S. dollar and all that's coming together to push oil prices lower. Given the sensitivity to resource prices in the TSX we're seeing a little bit of weakness there," he added.
Gold miners were also down sharply, off 1.1 percent, as bullion retreated from an 11-month high.
Yamana Gold dropped 2.9 percent to C$18.65, Barrick Gold
fell 0.8 percent to C$41.04 and Kinross Gold
lost 2.5 percent to C$10.61.
At 3:28 p.m. (1928 GMT), Toronto Stock Exchange's S&P/TSX composite index
was down 41.00 points, or 0.33 percent, to 12,406.68. Eight of the 10 sectors were negative. Financials edged up 0.1 percent. Earlier, the index its strongest intraday level since Sept. 17.
Better-than-expected employment data from Canada and the United States helped stem the losses.
In Canada, the economy added 52,100 jobs in September, more than five times the consensus figure analysts had expected, and bolstering the Bank of Canada's case for an eventual interest rate rise.
Meanwhile, the U.S. unemployment rate unexpectedly dropped to 7.8 percent in September, reaching its lowest level since President Barack Obama took office and providing a boost to his re-election bid.
On Monday, Canadian markets will be closed for Thanksgiving, while U.S. government offices and some financial markets will close for the Columbus Day holiday, prompting some investors to stay on the sidelines.
"Quite often on the Friday before a long weekend there's some selling coming into the market because people don't want to carry positions for three days," said John Kinsey, portfolio manager at Caldwell Securities.
(Editing by Gary Crosse)
FOR CANADIAN MARKETS NEWS, CLICK ON CODES IN BRACKETS: TSX market report........................................
Canadian dollar and bonds report...................
Reuters global stocks poll (Canada)...
Top News: Canada ....................................
FOR CANADIAN MARKETS DATA.............................
Keywords: MARKETS CANADA/STOCKS