Toronto index reverses gains to close lower as markets parse Fed statement

(Reuters) - Canada's main stock index reversed earlier gains to close lower on Thursday, as markets further parsed the implications of the U.S. Federal Reserve's plans to speed up the taper of its bond-buying program and its inflation expectations.

The Toronto Stock Exchange's S&P/TSX composite index closed down 29.38 points, or 0.14%, at 20,739.78.

Technology stocks led declines, losing 2.2%, with Lightspeed Commerce, Docebo and Converge Technology Solutions among the 10 biggest losers on the benchmark, tracking the tech-heavy Nasdaq's 2.5% decline in the U.S.

On Wednesday, the Fed said it would accelerate the pace of its tapering and laid out a scenario in which the pandemic, despite the Omicron surge, gives way to a benign set of economic conditions, but it dropped references to inflation as "transitory."

The Fed's policy statement lifted the TSX on Wednesday to its first positive close since Dec. 7..

"What's happening today is the sobering effect of what (Fed Chairman Jerome) Powell said yesterday," said Philip Petursson, chief investment strategist at IG Wealth Management.

This is causing "a real barbell effect," he added. "Inflation helps gold, commodities, financials ... technology is bearing the brunt."

Materials were the biggest gainers, climbing 2.15%, with mining companies MAG Silver, Pan American Silver and Silvercorp Metals rising the most, as spot silver added 1.7% to $22.44 an ounce and spot gold increased 1.2% to $1,797.95.

Energy shares were flat, despite a rise in the crude oil price of 1.6%, to $72.03 a barrel.

(Reporting by Nichola Saminather in Toronto; Additional reporting by Amal S in Bengaluru; Editing by Vinay Dwivedi and Leslie Adler)

By Nichola Saminather