By Siddarth S and Fergal Smith
(Reuters) -Canada's main stock index fell on Monday, as the technology and healthcare sectors led broad-based declines ahead of domestic inflation data that could help guide expectations for the Bank of Canada's interest rate outlook.
The Toronto Stock Exchange's S&P/TSX composite index ended down 129.51 points, or 0.6%, at 20,492.83, after posting on Friday its highest closing level in six weeks.
"There's no doubt that inflation is going to continue to show a tick higher on a year-over-year basis," said Philip Peturrson, chief investment strategist at IG Wealth Management. "The question is whether the BoC will recognize that this is more (due to) base effects, or if they will feel that they need to respond to this."
Canada's consumer price index report for August, due on Tuesday, is expected to show the annual rate of inflation rising to 3.8% from 3.3% in July.
Investors are also awaiting the U.S. Federal Reserve's monetary policy decision on Wednesday.
"The U.S. central bank is expected to hold interest rates steady, but the market may focus more on hints about the future of interest rate hikes in the statement and the member forecasts on the Fed Funds rate," Colin Cieszynski, chief market strategist at SIA Wealth Management, said in a note.
The Toronto market's ten major sectors lost ground, with technology down nearly 2% as shares of e-commerce company Shopify Inc lost 5.4%.
Healthcare was down 3.9%. It was pressured by a 14.2% decline in the shares of cannabis firm Tilray Brands Inc after Kerrisdale Capital said it was short the stock.
Shares of Bank of Montreal fell 0.9% after the third-largest Canadian lender said it was winding down its indirect retail auto finance business and shifting focus to other areas.
Financials, the most heavily-weighted sector on the TSX, were down 0.4%.
(Reporting by Fergal Smith in Toronto and Siddarth S in Bengaluru; Editing by Tasim Zahid and Deepa Babington)