TORONTO (Reuters) - Canada's main stock index slid on Tuesday to a near two-week low after the breakup of a Russian-Belarusian potash joint venture sent Potash Corp POT.TO shares tumbling as fears of a drop in the price of the fertilizer ingredient gripped investors.

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch

The breakup by Russia's Uralkali URKAq.LURKA.MM of its venture with Belaruskali dismantled the world's largest potash cartel, in a move that Uralkali expects to slash prices by 25 percent, heralding a reshaped industry and pummeling shares of rival producers.

Potash, one of the world’s largest fertilizer makers, lost close to a sixth of its market value, dropping 16 percent to C$32.66. With more than 103 million shares changing hands in the stock’s busiest trading since 2010, it was by far the most active listing on the Toronto Stock Exchange.

“Potash has already been badly hit this year by a weak environment, but today we’ve seen a rout,” said Michael Sprung, president of Sprung Investment Management.

“This is going to put further pressure” on Potash and other fertilizer producers, he said, adding it could significantly hurt their sales and profits.

Agrium Inc AGU.TO, which like Potash is a member of the North American Canpotex potash marketing joint venture, fell 5 percent to C$89.15 in its busiest trading since November 2012.

Investors also were cautious as they awaited a policy statement from the U.S. Federal Reserve on Wednesday and the all-important U.S. monthly jobs report later this week.

Fed officials are likely to have a lively debate on how best to prepare financial markets for a reduction of the U.S. central bank’s bond-buying program, but appear certain to wait for further economic data before curtailing the stimulus.

“I expect a likely confirmation that they will maintain a low interest-rate environment,” Sprung said. “To a great extent, they’re going to make statements that don’t disrupt the markets.”

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 87.29 points, or 0.69 percent, at 12,581.75, after reaching 12,555.82, its lowest level since July 17. Seven of the 10 main sectors on the index declined.

The materials sector index, which includes Potash Corp and other miners, dropped 3.7 percent.

Gold miners’ shares declined as the price of bullion edged lower, with investors nervous about monetary policy moves by the Fed. <GOL/>

Goldcorp Inc G.TO lost almost 1 percent to C$29.12, and Barrick Gold Corp ABX.TO fell 2.1 percent C$17.72.

Financials, the index’s most heavily weighted sector, were down 0.7 percent.

Toronto Dominion Bank TD.TO declined 1.8 percent to C$87.25, and Royal Bank of Canada RY.TO slipped 0.5 percent to C$64.89.

TD Bank’s stock fell after the company warned it expects to report a third-quarter loss in its insurance business due to floods in Alberta and storms in the greater Toronto area, joining a list of Canadian companies hurt by bad weather.

In other company news, WestJet Airlines Ltd WJA.TO posted a slightly higher-than-expected quarterly profit on Tuesday but warned that a key measure of airline efficiency would decline in the near term as it launches its Encore regional carrier. The stock was little changed.