* TSX down 27.29 pts, or 0.2 pct, at 12,458.30
* Index still up 0.6 pct for the week
* Gold miners, financials drag
* Greek debt deal progress helps sentiment
By Jon Cook
TORONTO, Feb 17 (Reuters) - Canadian stocks fell slightly on Friday as earnings-related drops in gold-mining and financial issues offset optimism that Greece will seal a long-awaited bailout deal next week and avoid a messy debt default.
Soft earnings from Canada's top gold miners this week dragged on the heavyweight materials sector, which fell 1 percent. Financial shares were down 0.1 percent, hurt by a big quarterly loss reported by Fairfax Financial Holdings.
Among miners, Barrick Gold fell 2.4 percent to C$46.83 after the country's largest gold producer reported an increase in quarterly operating profit on Thursday, but still fell short of expectations.
Smaller miners Kinross Gold and Agnico-Eagle also weighed after both reported big impairment charges. Kinross was down 1.8 percent at C$10.87, and Agnico-Eagle fell 3.5 percent to C$35.27.
Gold-mining stocks have been helped by a 10 percent rise in spot gold so far this year, but the precious metal's price has recently begun to fluctuate with the euro and on Friday it fell.
"You're seeing the (gold) stocks reflect a bit more of that volatility," said Craig Fehr, Canadian investment strategist at Edward Jones in St. Louis, Missouri. "It's more about what the specific companies are doing in terms operation as opposed to just participating in the huge updraft from the rising price in gold."
The Toronto Stock Exchange's S&P/TSX composite index closed down 27.29 points, or 0.2 percent, at 12,458.30 on Friday. The index was still up 0.6 percent for the week.
The index fell despite news that Greece was close to an agreement with euro zone policymakers on a debt swap deal. Finance Minister Jim Flaherty said on Friday he was "cautiously optimistic" that European leaders would resolve the Greek debt crisis next week.
"Some of the rhetoric that we've been hearing over the last 24 hours makes you feel that they're getting there," said Fred Ketchen, director of equity trading at ScotiaMcLeod.
Signs of progress on a Greek deal failed to help Canadian financial issues. Fairfax Financial pulled the sector down, sliding more than 4 percent to C$400 after the property and casualty insurer run by investment guru Prem Watsa said on Thursday its fourth-quarter loss widened by 56 percent to C$771.5 million ($773.9 million).
Oil and gas issues edged up 0.4 percent as U.S. crude futures hit a nine-month high on Friday, supported by tension between Iran and the West.
Canadian Natural Resources led gains, up 0.8 percent at C$37.38, helped by a rise in Canadian spot natural gas prices ahead of a holiday weekend.
Monday is a holiday in most of Canada and the Toronto Stock Exchange is closed.
Higher oil prices also pushed Canada's annual inflation rate up to 2.5 percent in January from 2.3 percent in December, Statistics Canada data on Friday showed. The year-over-year advance was slightly bigger than the 2.3 percent predicted by economists.
The Bank of Canada, whose target range for inflation is 1 percent to 3 percent, has made it clear it will keep interest rates low for the time being. Most economists expect the next rate hike in early 2013. CA/POLL
"Some of the implication from the CPI numbers today is that the Bank of Canada might need to move on rates a little bit ahead of what the market might have expected," Fehr said.