* TSX up 2.38 points at 12,625.74

* Trading around highest level since Sept. 9, 2011

* Materials shares rise, financials fall

* U.S. housing data boosts sentiment

* Weak euro zone, China data weighs

By Jon Cook

TORONTO, Feb 22 (Reuters) - Toronto's main stock index was little changed at midday on Wednesday after hitting a five-month high the previous session as weak data from the euro zone and China countered strong U.S. housing figures.

U.S. home resales surged in January to a 1-1/2 year high and the supply of properties on the market was the lowest in almost seven years, pointing to a nascent housing recovery in Canada's top trading partner.

The data helped the index's heavyweight materials sector edge up 0.2 percent. Potash Corp, the world's top fertilizer producer, led the group, rising 0.7 percent to C$47.21 on hopes for increased U.S. demand.

"The prospects of the U.S. are beginning to get a little brighter," said Rick Hutcheon, president and chief operating officer at RKH Investments. "There are signs that there may be some improvement in the nearer term and that's what the market has been waiting for."

At 12:04 (1704 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 2.38 points at 12,625.74, the TSX's highest level since Sept. 9, 2011.

Oil and gas issues were up slightly as Brent crude oil reached a nine-month high on Wednesday, supported by Iran-related supply worries. Suncor Energy was the biggest heavyweight gainer, rising 1 percent to C$35.10.

The gradually brightening U.S. economy has helped the TSX rally more than 5 percent this year despite continued unease about conditions in Europe.

"It's a North American phenomenon," Hutcheon said. "We've become a little more inward looking and a lot of that has been forced on us by the grief that's going on in Europe."

Optimism about Tuesday's approval by European officials of another multibillion-dollar bailout for Greece waned on Wednesday as data showed the euro zone may be sliding back toward recession.

Preliminary data also showed China's new export orders shrank in February in a worrying sign that the euro area debt crisis is afflicting the world's top consumer.

Financial shares fell 0.4 percent. Toronto-Dominion Bank mirrored the sector's drop, sliding 0.4 percent to C$78.87.

In earnings news, Rogers Communications shares rose 0.9 percent to C$38.12 after it reported a stronger than expected quarterly profit and raised its dividend.

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