• S&P/TSX composite index down 52.23 points, or 0.2%
• Materials sector fell 0.91%, energy index down 0.77%
• Canadian dollar weakened 0.3% to the greenback
• Main index up 22% this year, hovers around record high

Dec 2 (Reuters) - Canada's main stock index fell on Monday, pulled down by a strong U.S. dollar and lower commodity prices that weighed on the commodity-heavy index.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) , opens new tab was down 52.23 points, or 0.2%, at 25,595.77.

The materials and energy companies, which together account for more than a quarter of the weight of the composite index, fell as a strong dollar made prices of these commodities more expensive in local currency.

Canada's materials sector (.GSPTTMT) , opens new tab fell 0.91% owing to lower gold and copper prices while the energy index (.SPTTM) , opens new tab was down 0.77% on lower crude oil prices in Canadian currency.

"Overall market sentiment appeared cautious, influenced by a mix of global cues and some sectoral pressures," said Robert Gill, senior vice president and portfolio manager at Goodreid Investment Counsel.

Also, uncertainty regarding global economic conditions, including interest rate trajectories and commodity price volatility, is negatively influencing market sentiment, he said.

The healthcare sector was the biggest loser of the day with a drop of 4.37%, weighed down by Bausch Health Companies (BHC.TO) , opens new tab, which fell over 7%.

The TSX has had a stellar year so far with overall returns of over 22%, and it currently hovers around its record high levels, especially led by heavyweight financials, materials and mining.

Financials (.SPTTFS) , opens new tab, representing primarily the top six banks, accounts for close to a third of the total weight of the composite index and has gained close to 30% this year.

The loonie weakened by 0.3% to to 1.40 against the U.S. dollar, or 71.43 U.S. cents, but recovered some early morning losses which saw it falling by almost 0.5%.

On the economic data front, Canadian manufacturing activity increased at the fastest pace in 21 months in November.

Later in the week, the spotlight will be on key November employment numbers that could dictate how far and how fast the Bank of Canada will lower interest rates.

For the Dec. 11 rate-setting meeting, traders are pricing in a 48% chance for a 50-basis point cut and a 25 basis point rate cut is fully priced in.

The focus will also be on quarterly earnings from big Canadian lenders later in the week, including results from Royal Bank of Canada (RY.TO) , opens new tab, National Bank of Canada (NA.TO) , opens new tab and Toronto Dominion Bank (TD.TO) , opens new tab, among others.

"Eyes will be watching to see how all banks are handling mortgage renewals and provisions for credit losses," Gill of Goodreid said, adding that any positive forward guidance from TD would likely boost its share prices.

South of the border, Friday's U.S. monthly payrolls report could guide the Federal Reserve's move at its policy meeting on Dec. 17-18.

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https://www.reuters.com/markets/tsx-futures-rise-oil-strength-focus-domestic-jobs-data-2024-12-02/