TORONTO (Reuters) - Brokerage firm Barclays Capital on Thursday lowered its rating on the Canadian financial services sector, saying domestic and global headwinds are likely to slow earnings growth in 2012.

Barclays cut its rating on the sector to "neutral" from "positive." The firm also downgraded individual companies within the sector and cut price targets on shares of all of Canada's top banks and insurers.

The firm cut its ratings on CI Financial (Toronto:CIX.TO - News), Power Corp (Toronto:POW.TO - News) and Power Financial (Toronto:PWF.TO - News) to "equal weight" from "overweight."

Barclays analyst John Aiken said that while 2011 was a challenging year for the Canadian financials, he sees few catalysts to support outperformance in 2012.

"A moderating outlook for Canadian economic growth and continued global headline risks will not only create headwinds for earnings but will likely weigh on valuations as well," wrote Aiken in a note to clients.

Aiken said "consumer deleveraging and ongoing margin pressures," as a result of the low interest rate environment, would hurt Canadian banks.

"While cost-cutting can provide some mitigation, it is unlikely to generate outright growth," he said in relation to the outlook for the banks.

http://ca.finance.yahoo.com/news/barcla ... 37195.html