A surge in October wholesale inflation in the U.S. helped deflate Wall Street Tuesday morning, while Bay Street was held back by declining information technology shares after it reached a two-and-a-half year high on Monday.

At midday, the S&P/TSX composite was off 15.13 points or 0.17% at 8922.09 after closing up 40.85 points Monday to its highest level since Feb. 15, 2001. The TSX Venture exchange advanced 1.62 points or 0.10% to 1632.67.

In New York, the Dow Jones industrial average was down 60.52 points or 0.57% to 10489.72. The Nasdaq lost 16.96 points or 0.81% to 2077.13 and the S&P 500 was off 7.47 points or 0.63% to 1176.34.

The Canadian dollar had taken back much of Monday’s loss of just over half a U.S. cent; it was up 0.42 of a cent to US83.72¢.

In Toronto, technology stocks led the market lower, falling 1.18% as a group. They were led by a 1.07% drop in Nortel Networks Corp., which was hit by more negative news that a former manager says he tried to blow the whistle on accounting irregularities as far back as 1999. Other tech decliners included Geac Computer Corp, which was down 1.57%, and ATI Technologies, off 1.65%.

The TSX’s consumer discretionary group was also off, down 0.85%, led by an 8.75% drop in Alliance Atlantis shares. They were off despite reporting stronger earnings for the three months ended Sept. 30.

The TSX gold sub-sector was one of the few signs of life. It was ahead 1.61% as the price of bullion advanced $3.50 to a 16-year high of US$440.00 an ounce.

The financials sector was off 0.11%. But the loss was mitigated by a 1.04% gain in shares of Sun Life Financial shares, which forecast 10% annual growth in earnings and said it plans to accelerate a share buyback program.

On Wall Street, it was the sharp pickup in U.S. wholesale inflation last month that helped send markets lower. Wholesale prices surged 1.7% in October, driven by higher energy and food costs. That’s the largest increase in the producer price index since early 1990 and surprised economists who were expecting a 0.6% rise. The core rate, which excludes food and energy, came in at a much milder rate of 0.3 per cent. The big month-over-month jump came after wholesale prices edged up just 0.1 per cent in September.

Also putting pressure on Wall Street were losses by some of the biggest U.S. retailers. Wal-Mart Stores was off 1.33% as third quarter sales fell short of expectations. Home Depot was down 1.67% despite reporting a nearly 15% jump in third-quarter earnings. Staples Inc., the largest U.S. office products retailer, was off even though it narrowly beat analyst forecasts as it reported a 26% increase in its third-quarter profit.

Meanwhile, oil prices headed higher for the first time in four sessions, but were still more than 14% off their record levels, as traders mulled the outcome of this week’s U.S. inventory reports.

Crude for December delivery was up 38¢ at US$47.25 in New York.

Overseas, Tokyo’s Nikkei Stock Average of 225 issues fell 65.82 points, or 0.59%, to 11,161.75 points.

In Hong Kong, the blue-chip Hang Seng Index fell 186.14 points, or 1.34%, to 13,746.08.

London’s FTSE 100 index lost 36.9 points to 4,766.2. Frankfurt’s DAX30 edged 21.44 points lower to 4,112.9 while Paris’ CAC40 was off 34.38 points at 3,786.59.