* TSX ends down 0.4%
* Posts its lowest close since Dec. 1
* Energy falls 2.7% as oil settles 4% lower
* Materials group loses 1.9%
Dec 12 (Reuters) - Canada's main stock index fell on Tuesday as a drop in oil prices weighed on energy shares and investors assessed the latest U.S. inflation data for clues on the Federal Reserve's policy outlook.
The Toronto Stock Exchange's S&P/TSX composite index ended down 84.52 points, or 0.4%, at 20,233.84, its lowest since Dec. 1.
"The obvious culprit is the energy group and that's on the back of significant decline in oil prices," said Elvis Picardo, a portfolio manager at Luft Financial, iA Private Wealth.
The energy sector was down 2.3% as the price of oil fell to a 5-1/2-month low, pressured by growing concerns of oversupply. U.S. crude futures were down 3.6% at 68.7 a barrel.
"We've had a strong run (for the TSX) since the beginning of November," Picardo said. "Hopes are still pinned on a soft landing in the U.S. Tomorrow's FOMC announcement will be crucial in setting the tone for the rest of the year."
The Fed is expected to leave its policy rate on hold on Wednesday and is seen holding off on any interest-rate cuts until at least May of next year, after a government report on Tuesday showed consumer prices unexpectedly edged back up in November.
The materials group, which includes precious and base metals miners and fertilizer companies, was also a drag, losing 1.9%.
Cogeco Communications fell 6% after Rogers Communications sold its stake in the company to Canada's second-largest pension fund Caisse de depot et placement du Quebec.
Stelco Holdings, Canada's biggest steelmaker, was a bright spot. Its shares gained 7.8% after J.P.Morgan upgraded the stock to "overweight" from "neutral".
Manulife Financial Corp shares added 1.6%, notching a 15-year high, as Canada's top insurer moved to further de-risk its long-term care business. (Reporting by Fergal Smith and Nivedita Balu in Toronto and Shashwat Chauhan in Bengaluru; Editing by Ravi Prakash Kumar and Marguerita Choy)
