Toronto stocks dropped sharply Wednesday after the U.S. Federal Reserve held interest rates steady, but hinted it might be nearer to raising them. The S&P/TSX composite index finished down 52.47 points, at 8,535.71.

Toronto volume was a heavy with 305 million shares changing hands.

Although the Fed decided to leave U.S. rates at 46-year, it changed its wording on the future of rates slightly to say it can “be patient” before raising borrowing rates.

Previously, the Fed had said it would keep rates low for a “considerable period.”

Overall, nine of the 10 TSX subindexes ended lower with healthcare down 2.74%, while the industrials and materials groups endured more than 1 percent declines and energy stocks fell 1.58%

In healthcare, Biovail fell $2.12 to C$29.97 after an analyst cautioned that Canada’s biggest drugmaker had shipped large amounts of inventory to wholesale customers and could find it hard to meet 2004 earnings forecasts.

The materials group fell 1.26%, as gold mining stocks dropped 0.93%.

Barrick Gold fell 53¢ to $26.25, while Glamis Gold shed 34¢ to $19.94.

The telecoms sector was alone in positive territory, rising 2.61%, buoyed by Manitoba Telecom Services. MTS shares rose $2.37 to C$52.07.

The telephone company was one of the most active issues on the day as investors cheered news it would let shareholders vote on a proposal to convert to an income trust.

Overall market momentum was negative as 760 issues declined and 529 advanced.

On Wall Street, a broad-based selloff followed the Fed’s announcement on interest rates. The Dow Jones industrial average fell 144.44 points to 10,465.48, while the tech-laden Nasdaq composite index slumped 38.67 points at 2,077.37. The S&P 500 dropped 15.57 points to 1,128.48.

Only Canadian small-cap stocks managed to buck the downtrend. The junior S&P/TSX Venture composite index added 4.42 points to finish at 1,804.14.

Falling interest rates in Canada and a surge of U.S. dollar strength battered the Canadian dollar Wednesday, taking more than a full U.S. cent off the currency’s value. The loonie closed down 1.17¢ to US75.45¢ — the biggest one-day drop since last May 22.