The Canadian Press

The Toronto stock market closed sharply lower Wednesday as a late-day selloff in financial and tech stocks reversed a modest advance.

The S&P/TSX composite index fell 96.1 points to 11,442.02.

The Canadian dollar gained 0.43 of a cent to US95.6¢ a day after losing almost two cents, despite a strong indication from the Bank of Canada that a rate hike won’t happen until the middle of next year. The central bank also delivered a clear warning of the damage being done to the economy by the surging currency.

New York markets also fell sharply, with the Dow Jones industrials down 92.12 points to 9,949.36.

The TSX financial sector gave up 1.4% after prominent U.S. banking analyst Dick Bove at Rochdale Securities downgraded Wells Fargo, the fourth-biggest U.S. bank, to sell, sending its shares down US$1.53 or 5% to US$28.93.

The downgrade sparked a selloff across most sectors late in the session and came just hours after the bank reported a US$2.6 billion third-quarter profit. But the bank also said credit losses climbed to US$5.1 billion, or 2.5% of its loan portfolio. That is up from US$2 billion a year ago and US$4.4 billion in the second quarter.

In Toronto, TD Bank (TSX:TD) declined $1.08 to $64.20 and CIBC (TSX:CM) fell $1.26 to $64.12.

The TSX tech sector lost 1.7% with Research In Motion Ltd. (TSX:RIM) down $1.08 to $68.78.

The energy sector lost early gains and finished down 0.7% even as the December crude contract on the New York Mercantile Exchange jumped $2.25 to US$81.37 a barrel — its highest close since mid-October, 2008 — as gasoline inventories fell by 2.3 million barrels last week. Canadian Oil Sands Trust (TSX:COS.UN) fell 85¢ to $32.47 and Nexen Inc. (TSX:NXY) dropped 27¢ to $25.49.

Crude has been running up sharply over the past week to levels that could start causing problems for the pace of an economic revival.

“It’s going to eat into spending, into the economy absolutely,” said Phillip Petursson, director of institutional equities at MFC Global Investment Management.

“It drives margins down because, basically, transportation is a part of just about everything — not only on the consumer side but also in goods manufacturing.”

The base metals sector limited TSX losses, rising 0.8% as the December copper contract on the Nymex was ahead 10.4¢ at US$3.036 a pound. Copper has surged more than 19¢ or 6.7% this week because of American currency weakness and optimism that China will meet or exceed growth targets this year. HudBay Minerals (TSX:HBM) climbed 38¢ to $15.04.

The gold sector lost 0.68% even as December bullion gained US$5.90 on the Nymex to US$1,064.50 an ounce. Kinross Gold Corp. (TSX:K) faded 44¢ to $23.19.

The TSX Venture Exchange moved up three points 1,342,59.

Performance has been muted on the TSX in recent days despite a steady parade of well-received U.S. earnings reports.

But analysts point out that the TSX is up more than 50% from the lows of early March as investors forecast that earnings and economic performance would justify such a sharp runup.

Now, it may be time for markets to consolidate those strong gains.

“Expectations were already built into the market, I think,” added Petursson.

“I think a more realistic scenario — and the optimistic scenario — is that we only trade sideways over the next little while as earnings continue to catch up with expectations.”

In New York, the Nasdaq composite index had been supported by a well-received earnings report from Yahoo Inc., but closed down 12.74 points to 2,150.73 while the S&P 500 index dipped 9.66 points to 1,081.4.

Elsewhere on the TSX, Canadian National Railways (TSX:CNR) helped send the industrials sector lower, with its shares down to 54¢ to $54.50. After the market close Tuesday, CN announced that quarterly profits dropped 16.4% to $461 million. Revenue fell 18% to $1.85 billion.

The consumer discretionary sector lost 1% as Gildan Activewear (TSX:GIL) declined 24¢ to $19.72 and Tim Hortons gave back 42¢ to $30.52.

Stream Oil & Gas Ltd. (TSXV:SKO), a junior Vancouver-based energy company that operates in the Balkan area of southern Europe, says an independent review has valued its Albanian energy reserves at more than $145.3 million. The news sent its stock charging ahead 10¢ or 25% to 50¢.

In other corporate news, Jaguar Financial Corp. (TSX:JFC) says it opposes a proposed $192 million takeover of nickel mine developer Canadian Royalties Inc. (TSX:CZZ) by Jien Canada Mining Ltd. Jaguar says holders of Canadian Royalties debentures should receive all of their principal plus a premium, not 80¢ on the dollar as proposed by Jien. Canadian Royalties shares lost 3¢ to 76¢.

@page_break@Inter Pipeline Fund (TSX:IPL.UN) has boosted monthly distributions to 7.5¢ from 7¢ a unit. It also raised distributions on an annualized basis to 90¢ from 84¢ after an operating and financial review. Its units rose 20¢ to $10.35.