North American markets were trading lower at mid-day, as investors reacted to prospects that interest rates will probably be headed higher by yearend by locking in profits.

In Toronto, the S&P/TSX composite index was off 18.59 or 0.22% to 8394.16, while the TSX Venture Exchange was down 13.59 or 0.85% at 1581.47.

On Wall Street, profit taking from Monday’s 148-point surge pushed the Dow Jones industrial average down 10.93 points or 0.11% to 10380.15. The Nasdaq fell 7.46 or 0.37% to 2013.16, while the S&P 500 slipped 2.90 to 1137.52.

The Bank of Canada left interest rates unchanged Tuesday morning while the chairman of the U.S. Federal Reserve said the Fed will do what it must to keep inflation at bay.

Alan Greenspan repeated in a London speech that coming rate increases will likely be at a methodical pace. However, he also said that if inflation heats up, the Fed “is prepared to do what is required to fulfill our obligations to achieve the maintenance of price stability.”

“Greenspan was kind of hedging himself on how he’s going to have to raise interest rates by saying it’s possible it may be a bit faster than what people anticipated, but he also reassured people the most likely outcome will be a slow, measured increase,” one senior trader told Reuters news agency.

The Canadian central bank’s decision to leave its key overnight rate at 2% was widely anticipated. In leaving the door open for rate hikes later in the year, the bank warned that overall inflation is being driven up by rising world oil prices. Many economists expect rates will rise in September.

Meanwhile, Canada Mortgage and Housing said housing starts in the first five months of this year were the strongest since 1987.

The Canadian dollar was unchanged at US74.31 at midday.

On Bay Street, the gold and mining sectors lead the way down, while financial services shares were trading up. Bank of Nova Scotia shares were among the most active; they were up 42¢ to $35.50 at noon.