Toronto stocks fell sharply on Thursday from record highs amid fears of an interest rate hike in China that could dampen demand for Canadian commodities.

The S&P/TSX composite index closed down 137.26 points, or 1%, at 13,574.70. The plunge came just one day after the index set record intraday and closing highs.

Overall, eight of the 10 TSX main groups were lower, led by a 2% slump in the resource-laden materials group and a 1.7% drop in the energy sector..

The utilities and healthcare groups were up 0.6% and 0.2%, respectively.

News that the Chinese economy grew at a rate of 11.1% in the first quarter fueled fears that China could raise rates to prevent its economy from overheating, news that also sent Asian and European markets lower.

Shares of Barrick Gold dropped 69¢, or 2.1%, to $32.45, while zinc giant Teck Cominco fell $1.59, or 1.8%, to $86.

The oil and gas sector tumbled as U.S. crude futures dropped 2% to settle at US$61.83 a barrel. EnCana shares fell $1.58, or 2.6%, to $60.10.

Investors also digested higher than expected Canadian inflation data released on Thursday morning, which raised the prospect that the Bank of Canada’s next move on interest rates may be up.

Statistics Canada said a rise in gasoline prices in March pushed the annual inflation rate to 2.3% from 2.% in February. The core inflation rate, which excludes volatile items such as energy and food, softened to 2.3% from 2.4%.

The junior S&P/TSX Venture composite index gave back 38.58 points to 3,296.61,

The Canadian dollar slipped 0.13 cent to US88.53¢.

U.S. stocks ended nearly flat as a rally in health-care shares offset worries China may take steps that reduce demand for U.S. goods.

The Dow eked out a record closing high for a second day in a row.

The Dow Jones industrial average rose 4.79 points, or 0.04%, to close at 12,808.63, a record. However, the S&P 500 was down 1.77 points, or 0.12%, at 1,470.73, and the Nasdaq composite index was down 5.15 points, or 0.21%, at 2,505.35.