By Fergal Smith
TORONTO (Reuters) - Canada's main stock index fell on Monday to its lowest level in nearly eight weeks as worries about the global economic outlook and a strengthening U.S. dollar weighed on energy and materials shares.
The Toronto Stock Exchange's S&P/TSX composite index ended down 174.49 points, or 0.8%, at 21,011.89, its lowest closing level since March 1.
The benchmark has lost more than 5% since notching a record intraday high on April 5, getting pulled into a global stocks selloff on worries about aggressive interest rate hikes by the U.S. Federal Reserve, soaring inflation and the Ukraine crisis denting economic growth.
The primary concern for investors has become "the impact of rising rates and recession possibilities," said Steve Palmer, chief investment officer at AlphaNorth Asset Management.
The Bank of Canada will likely consider another half-percentage-point rate increase in its next policy decision, Governor Tiff Macklem said, though he did not rule out an even larger move.
The safe-haven U.S. dollar scaled two-year peaks as a wave of risk aversion hit global markets, while the Chinese yuan tumbled on growing worries of an economic slowdown in the world's second-largest economy.
A stronger U.S. dollar "is not good for commodity prices, particularly gold," Palmer said.
Gold fell 1.7% to about $1,897 per ounce, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 3.1%.
The energy group also ended 3.1% lower, pressured by sliding oil prices. U.S. crude oil futures settled 3.5% lower at $98.54 a barrel.
Among sectors that gained ground was technology. It advanced 2.3% along with gains for U.S. technology shares as social media giant Twitter agreed to be bought by billionaire Elon Musk.
Toy manufacturer Spin Master Corp jumped 6.6% after Bank of Montreal upgraded the stock to "outperform."
(Reporting by Fergal Smith; Editing by Marguerita Choy)