North American markets fell sharply on Wednesday after a surprise decision by OPEC to cut oil production sparked concerns that higher energy costs could stifle an economic rebound.

The move will likely hike energy costs as the peak demand of winter approaches.

In New York trading, crude oil for November delivery jumped US$1.11 to settle at US$28.24 — well above a four-month low of $US26.65 set just last Friday.

The S&P/TSX Composite Index fell 41.70 points to 7,602.34.

Toronto losses were held in check by a 1.2% increase in the energy index. Talisman Energy gained $1.47 to $64.81; Canadian Natural Resources added 70¢ to $54.85; Petro-Canada climbed 74¢ to $54.49.

Technology and health care issues were the biggest losers.

The information technology index was down 3.6%. Zarlink Semiconductor plunged $1.13 to $5.75 after it lowered its quarterly revenue and earnings guidance.

Tech bellwether Nortel Networks dropped 24¢ to $6.

The TSX health care index was off 4.3%. Aeterna Labs plunged $3.10 to $5.85 after disappointing results in a kidney cancer drug trial.

Biovail fell $1.96 to $52.05, while Angiotech Pharma slipped $2.87 to $61.13.

Among active issues, Cascades shares fell 7¢ to $13.40 after the papermaker had to restate earnings because of a foreign exchange calculation mistake.

Bombardier gained 21¢ to $5.65. The Irish government confirmed the purchase of a Bombardier Lear jet.

BCE dropped 45¢ to $29.45.

The junior S&P/TSX Venture composite index shook off the downtrend, rising 12.74 points to 1,402.36.

On Wall Street, technology shares, which have been an area of recent strength, led the retreat. The tech-heavy Nasdaq composite index dropped 58.03 points, or 3.05%, to 1,843.69.

The Dow Jones industrial average plunged 150.53 points, or 1.57%, to 9,425.51. The broader S&P 500 fell 19.65 points, or 1.91%, to 1,009.38.