Stock markets were lower on inflationary concerns Friday. The S&P/TSX composite stock index was down 57.16 points to 8,641.93. For the week, the main index dropped 0.6%.

Canada’s annual increase in the consumer price index dropped to 1.2% in January, from 2% in December, with core inflation — the measure favoured by the Bank of Canada — down to 1.5% from 2.2%.

American consumer prices in January rose by 0.5% fueled by energy costs. However, U.S. core inflation, excluding energy, was a moderate 0.2% last month.

The TSX materials group, home to gold-mining companies, fell 1.5% to lead all losing sectors, while information technology shares dropped 0.9%. The 0.5% climb among health-care stocks the only positive move.

Nickel giant Inco dropped $1.21 to C$48.90, while Falconbridge eased 55¢ to close at $34.60.

Ahead of the start of earnings reports coming down next week from Canada’s big banks, Bank of Montreal lost 62¢ to $55.80 and Scotiabank shrank $1.10 to $67.92.

Gold stocks also dragged down the Toronto market, as the strength of the American dollar knocked down spot bullion US$12.30 to US$397.50 an ounce. Placer Dome was off 50¢ to $21.85, and Wheaton River faded 16¢ to $3.75.

Shares in Biovail were off 70¢ to $25.40 after the Ontario Securities Commission said it is investigating “suspicious trading activity” involving the company and is conducting a full review of the pharmaceutical giant’s disclosure records.

Canadian National Railway declined 20¢ to $53.50 as it was hit with a strike by 5,000 Canadian Auto Workers members.

In earnings news, shares in Rothmans moved 26¢ higher to $31.60 after quarterly profits rose 22.5% from a year ago to $25.9 million. Sales jumped 30% to $170 million.

On the TSX, declines beat advances 753 to 523 with 199 unchanged. Toronto market volume was 266.1 million shares.

The junior S&P/TSX Venture composite index slipped 10.06 points to close at 1,913.99.

In New York, stocks fell as disappointing earnings from computer heavyweight Hewlett-Packard weighed on the Dow and a report showing a jump in consumer prices in January increased inflation fears.

The Dow Jones industrial average fell 45.70 points to 10,619.03. The broader S&P 500 slipped 2.95 points, to 1,144.11. The tech-heavy Nasdaq composite index lost 8.03 points to 2,037.93.

For the week, the Dow dipped 0.08% and the S&P slipped 0.15%, snapping a two-week winning streak for both indexes. The Nasdaq fell 0.76% for the week.

The Canadian dollar continued to lose ground Friday against a strengthening U.S. greenback. The loonie closed down 0.38¢ to US74.78¢. The loonie lost US1.19¢ this past week.