The Toronto Stock Exchange's S&P/TSX composite index ended down 85.30 points, or 0.4%, at 21,077.35, after climbing 2.6% in the first two days of the week.
"It was pretty powerful in the two days prior, so I expected a pullback today," said Steve Palmer, chief investment officer at AlphaNorth Asset Management. "It's been my belief that it would be unusual to have a major correction in December. ... I expect a strong rally into year-end."
December has historically been a strong month for the stock market.
Concern about the fast-spreading Omicron variant helped cap gains on Wall Street, while the Bank of Canada said that the variant has created "renewed uncertainty" even as it warned that inflation was broadening.
"The surprise would have been if they (the BoC) went more hawkish, but they didn't," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "They're generally bullish on the economy and they're still trying to talk down inflation."
Leading losses for the Toronto market was the technology sector, down 2.2%, with Nuvei Corp falling 40.4% following a new short call from Spruce Point Capital Management.
The industrials group ended 1% lower, while energy lost 0.5% despite higher oil prices. U.S. crude oil futures settled 0.4% higher at $72.36 a barrel.
The materials group, which includes precious and base metals miners and fertilizer companies, was one of the few sectors to gain. It added 0.3%, while healthcare was up 1.4%.
(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Will Dunham)
By Fergal Smith
