The Canadian Press

The Toronto stock market lost ground for a second straight session Wednesday amid concern over the possibility of higher interest rates in the U.S. at a time when consumers are already curtailing their borrowing.

The S&P/TSX composite index moved down 45.81 points to 12,110.9 with losses spread through most sectors, while the TSX Venture Exchange climbed 11.39 points to 1,647.18.

Losses gained momentum late in the session after the U.S. Federal Reserve announced that consumer borrowing fell again in February in a setback to hopes that consumers are beginning to feel more confident and will start spending more. Consumer spending accounts for about 70% of U.S. economic activity.

The Fed said that borrowing declined by US$11.5 billion in February, surprisingly weaker than the small US$500- million gain that economists had expected.

And Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said that the Fed should start boosting interest rates “soon,” warning that delay could eventually unleash inflation.

But investors worry that raising rates too soon could derail the budding economic recovery and send stocks lower.

Even before those late-session developments, the TSX had been lower all day with investors disinclined to push prices higher amid a lack of market moving news and ahead of the first-quarter earnings season.

The market is up about 2.3% year-to-date following a positive fourth-quarter earnings season and strong economic data from Canada and the United States.

“Basically what the market is saying is: Look, we don’t mind putting the market higher but we’re going to have to see some data that supports the fact that we should,” said Gareth Watson, director Canadian Equities Portfolio Advisory Group at ScotiaMcLeod.

“You have corporate earnings season starting up next week in the U.S. and there will probably be decent numbers again. The economic data that is coming out is good but people expect that.”

Energy stocks led Toronto decliners as oil dropped 96 cents to US$85.88 a barrel after the U.S. Department of Energy reported a sharp rise in crude inventories last week. Stockpiles rose by two million barrels, against the 1.5 million that had been expected.

Crude prices rose more than 8% last week as positive economic reports encouraged expectations of rising demand.

On the TSX, Suncor Energy (TSX:SU) was down 58 cents at C$34.59 and Canadian Natural Resources (TSX:CNQ) dropped $1.07 to $78.12.

Talisman Energy Inc. (TSX:TLM) shares fell 43 cents to $17.40 after it said that it will sell a number of non-core assets in Canada through five separate transactions for a total of $1.9 billion. The Calgary-based oil and gas producer says it will sell its properties in Ontario as well as land in Western Canada where Talisman has its main Canadian base.

But blue chips also made strong contributions to the market’s malaise, with the industrials sector down 0.78%. Bombardier Inc. (TSX:BBD.B) fell back nine cents to $5.54.

Financials were down 0.72% as TD Bank (TSX:TD) dropped 80 cents to $73.41 while Royal Bank (TSX:RY) shed 62 cents to $58.84.

The base metals component of the TSX was off 0.56% as May copper in New York was two cents lower at US$3.60 a pound. Teck Resources (TSX:TCK.B) declined $1.35 to C$45.40, while Labrador Iron Mines Holdings (TSX:LIM) was down 31 cents at $6.78.

Inmet Mining Corp. (TSX:IMN) says workers at its Ok Tedi mine in Papua New Guinea have been on an illegal strike over bonus distributions since April 1. As a result, the company expects its full-year copper production has been hurt so far by 0.4% and gold output will be at least 1% below target. Inmet shares declined 57 cents to $59.93.

The gold sector was the main advancer as the June gold contract on the Nymex was ahead $17 at US$1,153 an ounce. Barrick Gold Corp. (TSX:ABX) rose $1.44 to C$40.88 and Goldcorp Inc. (TSX:G) ran ahead $1.78 to $40.06.

A rising U.S. dollar helped push the Canadian dollar down 0.39 of a cent to 99.49 cents US a day after regaining parity for the first time since mid-2008. The currency moved as high as 100.03 cents US earlier Wednesday.

In economic news, Statistics Canada reported that the value of building permits edged down 0.5% to $5.7 billion in February from January. The agency said increases in permits for commercial buildings and single-family dwellings failed to offset a significant decline in multiple-dwelling permits.