TSX pulls back from near 2-month high as oil prices slide

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index fell on Wednesday, pulling back from a near two-month high the day before, as a drop in oil prices weighed on energy shares and investors turned attention to U.S. inflation data.

The Toronto Stock Exchange's S&P/TSX composite index ended down 316.06 points, or 1.6%, at 19,344.25, after posting on Tuesday its highest closing level since Sept. 14.

"It's not doing great today but all things considered not badly given the state of U.S. equities and the energy price," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

"Energy stocks are taking a pretty significant hit today with the fall in the oil price."

Wall Street tumbled as Republican gains in midterm elections appeared more modest than some expected, with investors also focusing on U.S. inflation data on Thursday that will provide clues about the severity of future interest rate hikes.

U.S. crude oil futures settled 3.5% lower at $85.83 a barrel on Wednesday, after industry data showed that U.S. crude stockpiles rose more than expected and on concerns that a rebound in COVID-19 cases in top importer China would hurt fuel demand.

The Toronto market's energy sector fell 4.2%, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 2.5%.

Technology was also a drag, falling nearly 2%, and heavily-weighted financials ended 1.3% lower.

It included a decline of 1.4% for the shares of Bank of Montreal after a U.S. jury on Tuesday found the bank's local unit liable for more than $550 mln in damages for a Ponzi scheme operated by a Minnesota businessman.

Oil and gas pipeline company TC Energy Corp said it was looking to sell C$5 billion ($3.7 billion) worth of assets to repay debt and fund new projects. Its shares ended 2.5% higher.

(Reporting by Fergal Smith; Additional reporting by Shashwat Chauhan in Bengaluru; Editing by Sandra Maler)