TSX falls by most in 5 months as central banks turn more hawkish

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FILE PHOTO: A man walks past an old Toronto Stock Exchange sign in Toronto

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index fell to a seven-week low on Friday as investors weighed the prospect of aggressive interest rate hikes by central banks to cool inflation, with broadbased declines led by the financial, energy and materials sectors.

The Toronto Stock Exchange's S&P/TSX composite index ended down 464.03 points, or 2.1%, at 21,186.38, its biggest decline since last November and its lowest closing level since March 1. For the week, the index was down 3.1%.

Wall Street also slumped, with the decline coming one day after Federal Reserve Chair Jerome Powell's hawkish pivot, backing a quicker move to combat inflation.

The Bank of Canada has also turned more hawkish. It could consider a larger rate increase than the half-point move it made last week, Governor Tiff Macklem said on Thursday.

Domestic economic data showed the largest monthly gain in producer prices since the series began in January 1956.

All 10 of the TSX's major sectors lost ground, with the heavily-weighted financial services sector falling 2.6% and technology ending 2.5% lower.

Energy was down 1.9% as U.S. crude futures CLc1 settled 1.7% lower at $102.07 a barrel. Oil was burdened by the prospect of higher interest rates, weaker global growth and COVID-19 lockdowns in China hurting demand.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 2.6%. It included a decline of 9.1% for copper producer First Quantum Minerals Ltd as copper prices fell.

(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Alistair Bell)

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