TORONTO (Reuters) - Canada's main stock index fell back on Thursday as energy and mining stocks were tripped up by softer commodity prices, with see-sawing action likely to persist as investors fret about Greek debt talks and possible U.S. interest rate hikes.
The International Monetary Fund dramatically raised the stakes in Greece's stalled debt talks on Thursday, announcing that its delegation had left negotiations in Brussels and flown home because of major differences with Athens.
Meanwhile, robust U.S. retail sales data added more evidence of economic recovery in Canada's biggest trade partner, bolstering expectations the Federal Reserve will raise rates this year.
"The market is worried about the Fed raising rates here," said Mario Richard, an investment strategist at Fiera Capital Corp, who predicted more volatility in coming months as investors adjust their assessment about how monetary policy will affect the economy.
"In the very short term, people are not so sure that higher rates will be acceptable and tend to sell cyclical sectors, namely energy, commodities, airlines and stuff like that," he said.
Oil, which is priced in U.S. dollars, fell on the stronger greenback and after a World Bank report forecast the global economy would expand below its 3 percent forecast in January.
The materials group, which includes miners, lost 1.5 percent.
Gold XAU= prices halted a three-day rally, also hurt by the firmer U.S. dollar. [GOL/]
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended off 58.16 points, or 0.39 percent, at 14,830.88. Eight of the index's 10 main groups were in negative territory.
"Everything is a pretty mixed bag ... but when you look at it, drillers, oil and gas, mining, the materials are down," said John Ing, president of Maison Placements Canada, adding that markets were still keeping a wary eye on the Greek debt crisis.
"By and large, the market technically has shown signs of choppiness and the expectation is that will continue ... The only good thing is to say we are not having triple-digit losses as we had earlier this week."
Additional reporting by Solarina Ho; Editing by James Dalgleish