By Fergal Smith
(Reuters) -Canada's main stock index fell on Wednesday, including declines for financial and industrial stocks, as the prospect of interest rates remaining at elevated levels for an extended period weighed on investor sentiment.
The Toronto Stock Exchange's S&P/TSX composite index ended down 186.8 points, or 0.9%, at 20,226.96, its biggest decline since Aug. 15.
Wall Street stocks also fell after stronger-than-expected services sector data fueled concerns of sticky inflation and interest rates staying higher for longer.
The Bank of Canada left its benchmark interest rate on hold at a 22-year high of 5% as expected but said it could tighten further should inflationary pressures persist. The central bank hiked rates by a quarter point in both June and July.
"There could be additional fine-tuning action if necessary but right now it's appropriate to see how the incoming data is going to evolve," said Darcy Briggs, a portfolio manager at Franklin Templeton Canada.
Canada's economy unexpectedly contracted in the second quarter, while inflation accelerated in July to 3.3%.
Heavily weighted financials fell 0.7% and industrials were down 1.3%.
Enbridge shares were among the biggest decliners. They fell 5.9% after the Canadian pipeline operator said it will buy three utilities from Dominion Energy for $14 billion, including debt.
(Reporting by Fergal Smith in Toronto and Siddarth S in Bengaluru; Editing by Tasim Zahid, Will Dunham and Shweta Agarwal)