Mixed U.S. economic news fanned fears of rising inflation and higher interest rates, sending markets sharply lower Monday morning.

As of midday, on Bay Street the TSX/S&P composite was off 75.23 points or 0.9% to 8291.4, while the junior venture exchange, TSX Venture exchange, was down 19.7 or 1.26% to 1539.85. On Wall Street, the Dow Jones industrial average was lower by 76.3 points of 0.73% at 10333.8. The Nasdaq was off 25.75 or 1.29% at 1974.12, and the S&P 500 composite was down 10.44 or 0.92% at 1126.03.

The Canadian dollar dipped 0.20 of a cent to US73.08.

With inflation data for the United States, due Tuesday, many investors are worried the U.S. Federal Reserve may be forced to move aggressively on interest rates sent stocks lower Monday morning.

Those worries may have been heightened by a strong retail sales report showing a 1.2% increase in retail sales in May after a 0.6% dip in April. Economists had expected a rise – but only of about 1%. There is speculation the Fed may decide to hike rates by a half-point later this month, instead of a quarter-point.

In another report, the U.S. trade deficit swelled to a record $48.3 billion in April, reflecting Americans’ demand for foreign-made goods, especially cars, TVs, furniture and clothes. April’s trade deficit was 3.8% larger than March’s shortfall, which had been the previous all-time monthly high. Higher imported crude oil prices also contributed to the trade deficit in April.

On the Toronto market, losses were led by energy and technology stocks, with all sectors but energy trading down. Financial stocks were off 0.7%.

Asian stock markets closed mostly lower on worries about higher interest rates and caution over the outlook for the technology sector.

Tokyo’s Nikkei Stock Average of 225 stocks dropped 35.16 points or 0.31% to 11,491.66 points. In Hong Kong, the blue-chip Hang Seng Index fell 319.82 points, or 2.6 %, to 12,076.57. Brokers said the selloff was triggered by renewed speculation that China might raise interest rates to help further tighten credit.

London’s FTSE 100 index fell 47.1 points or 1.05% to 4,436.9. Frankfurt’s DAX 30 retreated 1.7%, while the Paris CAC 40 dipped 1.6%.