At 9:46 a.m. ET (13:46 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 39.07 points, or 0.24%, at 16,006.87.

Inversion of Canada's yield curve by the most in nearly two decades is threatening to coerce the Bank of Canada to cut interest rates rather than risk an economic downturn, portfolio managers said.

Seven of the index's 11 major sectors were lower.

The energy sector dropped 0.8% as U.S. crude prices were down 1.4% a barrel, while Brent crude lost 2.1%. [O/R]

The heavyweight financials sector and the industrials sector fell 0.2%.

The materials sector, which includes precious and base metals miners and fertilizer companies, remained unchanged as gold futures fell 0.4% to $1,510.6 an ounce. [GOL/] [MET/L]

On the TSX, 93 issues were higher, while 137 issues declined for a 1.47-to-1 ratio to the downside, with 11.17 million shares traded.

The largest percentage gainer on the TSX were Boardwalk Real Estate Investment Trust, which jumped 4.7% after raising its full-year outlook for funds from operations.

The second biggest gainer was Stars Group Inc, which rose 2%.

Canopy Growth Co fell 10.6%, the most on the TSX, after reporting weaker-than-expected quarterly revenue, as the company sold lower volumes of medical cannabis.

The second biggest decliner was Birchcliff Energy Ltd , down 6.2% after posting second quarter results.

The most heavily traded shares by volume were Stornoway Diamond Corp, Aurora Cannabis and Royal Nickel.

The TSX posted one new 52-week high and 13 new lows.

Across all Canadian issues, there were 22 new 52-week highs and 41 new lows, with total volume of 22.06 million shares.

(Reporting by Medha Singh in Bengaluru; Editing by Shinjini Ganguli)