TORONTO (Bloomberg) — Canadian stocks fell for fourth time in five days after the US Federal Reserve left borrowing costs unchanged and said that inflation remains the greatest risk facing the US economy, Canada's biggest export market.EnCana declined along with natural-gas prices, and such raw-materials producers as Teck Cominco dropped, overshadowing a gain in shares of Meridian Gold, which received a 3.1 billion take-over bid from rival miners.

The Standard & Poor's/TSX Composite Index slipped 26.25, or 0.2 percent, to 13,715.67 in Toronto, reversing an earlier gain of 0.6 percent. The benchmark has fallen 3.3 percent from a June 18 record on declines in some commodities, and growing concern that higher inflation and borrowing costs may choke off US consumer spending and take-overs. Oil rose today, lifting such shares as Canadian Oil Sands Trust.

"The Fed's statement cooled any expectations that it may take a more dovish stance and may start planting the seeds for an interest rate cut later in the year," said Andre Pyle, investment executive for ScotiaMcLeod in Peterborough, Ontario. "The downside for the S&P/TSX was limited today because of the improvement in crude oil prices."

Inflation readings have "improved modestly," policy makers said after holding their benchmark lending rate at 5.25 percent for an eighth straight meeting. "However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated." Traders pared bets the central bank will lower its target rate this year.

The US took 87 percent of Canadian exports last year, of which more than half are energy and raw-materials. Expectations that Canadian borrowing costs may rise this year while US rates hold steady have helped lift the Canadian dollar to a 30-year high this month against it's US counterpart. That's hurting profits of companies selling their products south of the border and translating earnings back into Canadian currency

EnCana, Canada's biggest natural-gas company, fell C$1.81 to C$64.62 as natural-gas prices fell in New York, and the stock was downgraded to "hold" from "buy" by Richard Wyman at Canaccord Adams.

Natural gas in New York plunged to a five-month low after inventories in the US increased.