It was a depressing day for North American markets Tuesday, as Toronto stocks sustained a triple-digit loss, largely on a surprising announcement from the finance minister concerning income trusts, and as New York markets dropped, discouraged by the Federal Reserve’s rate hike and suggestions of further increases.

The S&P/TSX composite index sank 121.21, or 1.10%, to 10,903.52.

Volume on the senior exchange was heavy at 347 million shares.

In an unexpected move, finance minister Ralph Goodale said Monday that the Canadian government won’t provide advance tax rulings to companies considering starting or converting to income trusts, which could amount to a temporary freeze on the practice.

The news had a negative effect on several companies that were considering converting, or where speculated to be converting, part or all of their business into an income trust.

CI Financial dropped $2.85, or 11.09%, to $22.85.

BCE Inc., owner of Bell Canada and majority owner of Bell Globemedia, fell $1.70, or 5.16%, to $31.25.

TSX Group, which runs the country’s major exchanges, fell $5, or 11.10%, to $40.05.

AGF Management Ltd. fell $1.99, or 8.84%, to $20.51.

CanWest Global Communications, which plans to spin off most of its newspapers to an income trust, was down 63¢, or 4.43%, to $13.60.

CD and DVD maker Cinram, which said its trust conversion consideration won’t be stalled by the federal announcement, lost $2.31, or 8.16%, to $26.00

The price of crude oil moved lower as tropical storm Rita strengthened, threatening oil refineries. Light, sweet crude on the New York Mercantile Exchange settled at US$66.23, down $1.16, after gaining more than $4 in the previous session.

Eight of ten TSX indexes were down. The energy group was off a flat 1%.

In the biggest drop of the day, steemaker Stelco fell 0.445¢, or 61.81%, to 0.275¢ after the company presented its restructuring plan. Under the plan, existing shareholders’ investment would be lost and creditors would wholly own the firm..

The Canadian dollar closed down 0.09 of a cent to US85.48¢, down from last year’s 13-1/2 year high.

The junior S&P/TSX Venture composite index finished down 7.62, or 0.37

In economic news, Statistics Canada reported that wholesale sales fell 0.5 per cent in July from $39.7 billion in June. The leading indicator was up by 0.3% in July, same as in June.

In the U.S., the Federal Reserve lifted its key rate a quarter point to 3.75% and suggested more rate hikes are coming. Investors had hoped that the Fed would back off its current trend of lifting rates.

The Dow Jones industrial average fell 76.11 points, or 0.72%, to 10,481.52. Broader stock indicators also moved lower. The S&P 500 index lost 9.68, or 0.79%, to 1,221.34, and the Nasdaq composite index dropped 13.93, or 0.65%, to 2,131.33.