CANADA STOCKS-TSX drops a bit after mixed U.S. earnings reports

(Updates to mid morning)

* TSX down 24.03 points, or 0.2 percent, at 12,249.16

* Seven of index's 10 sectors weaker

By Claire Sibonney

TORONTO, Oct 10 (Reuters) - Canada's main stock index wasslightly lower on Wednesday morning as materials sharesstrengthened and financials weakened after the starting round ofthe U.S. earnings season flashed mixed signals.

A warning from Alcoa Inc

about slower aluminumconsumption underscored concerns about sluggish worldwidegrowth. But that was offset somewhat by Yum Brands Inc


the parent company of KFC, which raised its full-year outlookafter sales in China held up despite that nation's coolingeconomy.

"We all pretty much know that China has entered into aslower growth period...what Alcoa is reporting is old news basedon aluminum demand, which has been down in the dumps for years,"said Barry Schwartz, vice president and portfolio manager atBaskin Financial Services.

Earnings from warehouse chain Costco Wholesale Corp

were also a bright spot. The company reported a 27 percent jumpin fourth quarter profit on higher sales and membership fees.

Among the heaviest laggards on the TSX, Bank of Nova Scotia

fell 0.9 percent to C$53.30, and Toronto-Dominion Bank

dropped 0.5 percent to C$81.18.

Gold miners were among the top gainers after a heavysell-off in the previous session. Goldcorp Inc

rose 0.9percent to C$43.79, and Yamana Goldclimbed 1.9 percentto C$18.40.Aurico Gold

surged nearly 17 percent to C$7.31after announcing it will sell the Ocampo mine in Mexico, as wellas adjacent exploration projects and a 50 percent stake in theOrion project, to tycoon Carlos Slim's Minera Frisco for $750million.

At 10:50 a.m. (1450 GMT), the Toronto Stock Exchange'sS&P/TSX composite index

was down 24.45 points, or 0.2percent, at 12,249.12. Seven of the TSX's 10 sectors were innegative territory.

Analysts are forecasting the third-quarter earnings of WallStreet's S&P 500

companies will fall 2.3 percent from theyear-earlier quarter, according to Thomson Reuters data, whichwould be the first drop in U.S. quarterly earnings in threeyears.

Continued uncertainty over whether, and when, Spain willapply for a bailout helped darken the market mood. A Spanishbailout is seen by some as the necessary next step toalleviating the euro zone's debt crisis.

In its semi-annual check on the world's financial healthearlier this week, the International Monetary Fund said the eurozone crisis was an increasing threat to global financialstability and that confidence was "very fragile".

In Canadian company news, pharmacy chain Jean Coutu GroupInc

rose 0.4 percent to C$14.59 after reporting a risein adjusted quarterly earnings, helped by a double-digit gain insales and operating income at its generic drug manufacturingsubsidiary, Pro Doc.

"I thought the earnings that came out from Yum Brands ...Costco this morning and Jean Coutu were pretty meaningful. Thecompanies continue to report good earnings and modest economicgrowth continues," Schwartz said.

($1=$0.98 Canadian)

(Reporting by Claire Sibonney; Editing by Peter Galloway)

((claire.sibonney@thomsonreuters.com)(+1 416 941 8142)(ReutersMessaging: claire.sibonney.reuters.com@reuters.net))


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.............................