UPDATE 1-Toronto stocks lower in choppy action, economy eyed

(Adds details, updates to late morning)

*TSX index lower in choppy session after big early selloff

*Resource shares fall amid worries over demand

*Jitters over global economic outlook persist

By Leah Schnurr

TORONTO, July 3 (Reuters) - The Toronto Stock Exchange's main index was lower at late morning on Thursday, but well off early lows, as economic concerns nagged and resource shares fell amid worries over demand.

The index fell by more than 1 percent in early dealings, following a 3 percent decline on Wednesday, moving into 13,000 territory for the first time since the beginning of May.

Worries of rising inflation and slower growth set the tone after the European Central Bank cited inflation risks and decided to raise interest rates by a quarter point. But nerves were soothed after the bank cast doubt on further aggressive hikes.

Michael Sprung, president at Sprung & Co. Investment Counsel, said that the comments raised hopes that the U.S. Federal Reserve might not have to raise interest rates to bolster the greenback.