The Toronto stock market faded in the last 20 minutes of trading to close in the red, while U.S. stocks fell victim to worries about inflation and higher interest rates.

At close, Toronto’s S&P/TSX composite index was down 6.09 points or 0.06% to 9709.27, while the TSX Venture Exchange slid 5.11 points or 0.26% to 1972.18. The Dow industrial average lost 59.41 points or 0.55% at 10745.10. The Nasdaq fell 16.06 points or 0.78% at 2034.98, while the Standard & Poor’s 500 index was down 9.08 points or 0.75% to 1197.75.

The Canadian dollar failed to get a lift from a bullish report on Canadian manufacturing, slipping 0.12 of a cent at US82.78¢ late in the session as the U.S. dollar strengthened against other currencies. Statistics Canada reported a stunning turnaround in the manufacturing sector for January as shipments surged by 3% to $51.5 billion in January, following a 0.3% dip in December.

In Toronto, stocks spent most of the day in the black thanks in part to a major deal in the telecommunications industry. Telesystem International Wireless Inc. of Montreal said it is selling its two key assets to British based Vodafone Group PLC. The British-based company is paying US$3.5 billion in cash and assuming a pile of debt to take control of Romanian mobile phone group MobiFon and Czech wireless group Oskar Mobil. TIW shares jumped 52¢ or 2/9% to $18.47, pushing the telecommunications sub-group to a gain of 0.62% on the day.

Elsewhere, mining stocks advanced 1.12%, while financials gained 0.25%. Technology stocks and utilities were the biggest losers, falling 0.73% and 0.92% respectively.

Energy stocks slipped 0.54% even though crude prices were up. Crude for April delivery was last up 30¢ at US$55.25 a barrel, after falling as low as US$54.25 earlier.

On Wall Street, stocks traded lower across the board as inflation worries and higher interest rates trumped solid economic data and strong results from Lehman Bros.

Alcoa Inc. gained, rising 2.2% as the strength in metal prices continued to underpin gains. But fellow blue chip American International Group tumbled more than 3% after a downgrade from Fitch Ratings in the wake of Maurice “Hank” Greenberg’s stepping down from the CEO’s post. Standard & Poor’s and A.M. Best both said they would review AIG’s debt ratings.

On the broader market, decliners outpaced advancers by an 18 to 13 score on the New York Stock Exchange and by a 17 to 12 margin on the Nasdaq.