CANADA STOCKS-TSX falls as U.S. talks make investors nervous


* TSX down 17.51 points, or 0.13 percent, at 12,875.67

* U.S. debt negotiations key to investor sentiment

* Lower commodity prices weigh on resource-rich Canada index

By Alastair Sharp

TORONTO, Oct 15 (Reuters) - Canada's main stock indexslipped slightly in early trade on Tuesday, as nervous investorslooked to Washington for progress on fiscal negotiations toavert a damaging U.S. debt default.

Hopes of a deal rose after U.S. Senate Majority Leader HarryReid, a Democrat, and his Republican counterpart, MitchMcConnell, ended a day of talks on Monday, with Reid saying theyhad made "tremendous progress".

"I suspect something will happen on the positive side (inU.S. fiscal negotiations) but in the meantime the market is verynervous," said Irwin Michael, portfolio manager at ABC Funds.

Commodities were broadly lower, pushing the resource-heavyToronto Stock Exchange's S&P/TSX composite index down17.51 points, or 0.13 percent, at 12,875.67. It had opened inthe black then fallen sharply in the first hour of trade beforerecovering somewhat.

"It's very thin, very volatile, and all eyes are onWashington," Michael said.

Gold miners were weaker, as optimism that U.S. lawmakerscould avert a default dragged prices of safe-haven bullion tothree-month lows.

Goldcorp Inc fell 1.2 percent to C$24.14, whileBarrick Gold Corp gained 0.5 percent to C$17.90.

Pipeline operator Enbridge Inc declined 1.6 percentto C$42.28, while Talisman Energy Inc fell 2.2 percentto C$12.43.

BlackBerry Ltd gained 0.7 percent to C$8.41. Thestruggling smartphone company on Tuesday issued an open letterto its customers and partners in a string of newspapers in a bidto reassure them.


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