TORONTO, May 15 (Reuters) - Canada's main stock index fell to a 10-day low on Friday, with metal mining shares among the biggest decliners as bond yields globally jumped on rising concern that higher oil prices could feed inflation.
The Toronto Stock Exchange's S&P/TSX composite index ended down 434.92 points, or 1.3%, at 33,833.35, marking its lowest closing level since May 5. For the week, the index lost 0.7%.
U.S. stocks retreated from artificial-intelligence-fueled record highs as spiking crude prices ignited global inflation fears.
The Canadian 5-year bond yield, a key driver of Canadian mortgage rates, was up 11.6 basis points at 3.351%, its highest closing yield since July 2024.
"That will put upward pressure on mortgage rates and further dampen a soggy housing market, thus tightening conditions notably without the Bank of Canada even lifting a finger," Douglas Porter, chief economist at BMO Capital Markets, said in a note.
The Bank of Canada has said that if oil prices stay high and begin to push up inflation, it might have to respond with consecutive interest rate hikes. Canada's inflation report for April is due on Tuesday.
The materials group, which includes metal mining shares, tumbled 6.1%. The price of gold fell 2.4% and copper was down nearly 5%.
Consumer discretionary lost 1.9% and heavily weighted financials ended 0.5% lower.
Just two of the 10 major sectors ended higher. Energy added 2.1% as the price of oil settled 4.2% higher at $105.42 a barrel on reduced hopes of a deal to end ship attacks and seizures around the Strait of Hormuz.
Canada's Prime Minister Mark Carney and Alberta's premier signed a deal on industrial carbon pricing, part of a broader agreement they have been hammering out for months that is meant to pave the way for construction of a 1-million-barrel-per-day crude oil pipeline to British Columbia's northwest coast to start by September 2027.
Bird Construction Inc was another bright spot, with shares of the construction and maintenance company jumping 14.2% after a number of analysts raised their target price on the stock.
(Reporting by Fergal Smith in Toronto and Tharuniyaa Lakshmi in Bengaluru; Editing by Vijay Kishore)
By Fergal Smith
