CANADA STOCKS-TSX nears three-week low on emerging market fears

* TSX falls 135.47 points, or 0.99 percent, to 13,582.29

* Nine of 10 main index sectors decline

* Scotiabank has biggest negative influence on market

* BMO slips after making offer to buy UK fund manager

By John Tilak

TORONTO, Jan 27 (Reuters) - Canada's main stock index

dropped on Monday to its lowest in almost three weeks, hit by a

selloff in emerging market equities that was triggered by

concerns about Chinese economic growth and the U.S. Federal

Reserve's stimulus program.

Data out of China has shown signs of weakness in the world's

second-biggest economy and weighed on global equities.

Investors also eyed the U.S. Federal Reserve ahead of a

policy meeting this week to decide whether the central bank will

further scale back its stimulus measures.

A recent slump in the Turkish lira and declines in other

emerging market currencies and equities that began last week

spread to Canadian stocks as well, causing investors to avoid

riskier assets.

The Toronto market traded in the red for a third straight

day, following its biggest single-day drop in seven months in

the previous session, and turned negative for the year.

"Investors are suddenly fixated on the risk aspect, and

anything now seems like a looming crisis," said Elvis Picardo,

strategist and vice president of research at Global Securities (BSE: GLOBSEC.BO - news)

in Vancouver.

"If the emerging markets situation worsens, it does throw a

spanner into the works, but it's too early to tell," he added.

"Overall the feeling seems to be that this is a mere blip, and

not a very big correction."

The Toronto Stock Exchange's S&P/TSX composite index

closed down 135.47 points, or 0.99 percent, at

13,582.29, after touching 13,520.51, its lowest since Jan. 7.

Nine of the 10 main sectors on the index were in negative

territory.

Financials, the index's most heavily weighted sector,

dropped 1.6 percent. Bank of Nova Scotia slipped 2.2

percent to C$61.69 and had the biggest negative influence on the

market. Royal Bank of Canada (Toronto: RY-PC.TO - news) gave back 1.6 percent to

C$69.38.

BMO Financial Group declined 2.1 percent to C$70.46

after the lender made a preliminary offer to buy British fund

manager F&C Asset Management (Other OTC: FCAFF - news) for 697 million pounds

($1.2 billion) in cash.

Shares of gold miners reflected declines in the price of

bullion. Barrick Gold Corp fell 2.6 percent to C$20.61,

and Goldcorp Inc (Toronto: G.TO - news) shed 2.5 percent to C$25.93.

Weaker oil prices weighed on sentiment for shares of energy

producers, which fell 1.4 percent. Suncor Energy Inc (Toronto: SU.TO - news) was

down 1.6 percent, at C$36.32.

In other corporate news, Hudson's Bay Co said that

it would sell its flagship downtown Toronto store and

neighboring executive offices for C$650 million ($587.09

million) to Cadillac Fairview Corp and open a full-line Saks

store in the leased-back space. HBC shares gained 1.2 percent to

C$16.89.