TORONTO (Reuters) — The Toronto Stock Exchange’s main index fell sharply yesterday from recent record highs amid fears of an interest rate hike in China that could dampen demand for Canadian commodities.The S&P/TSX composite index closed down 137.26 points, or 1 percent, at 13,574.70. The retreat came just one day after the index, which is up 5.2 percent so far this year, set record intraday and closing highs.

Overall, eight of the TSX index’s 10 main groups were lower, led by a 2 percent slump in the resource-laden materials group and a 1.7 percent drop in the energy sector. Together, the sectors make up more than 40 percent of the index’s total weight.

The utilities and healthcare groups were up 0.6 percent and 0.2 percent, respectively.

“Given our market sensitivity to commodities it’s not a big surprise we would follow Asian markets and commodity markets lower,” said Fergal Smith, managing market strategist at Action Economics, adding that the sell-off should not be considered a “watershed” event.

“The upward trend is still very much intact for the Canadian market,” Smith said.

News that the Chinese economy grew at a rate of 11.1 percent in the first quarter fuelled fears that China could raise rates to prevent its economy from overheating, and also rattled Asian, European and US markets.

The TSX’s retreat was reminiscent of the global equity sell-off that took place on February 27, also triggered by a slump in Chinese stocks amid concerns over growth in the Asian giant. That day, the Toronto market lost 2.7 percent.

The oil and gas sector tumbled as US crude futures dropped 2 percent to settle at $61.83 a barrel, as rising refinery production and key pipeline restart eased worries of a US fuel supply crunch this summer. EnCana Corp. was down C$1.58, or 2.6 percent, at C$60.10.

Investors also digested higher than expected Canadian inflation data released yesterday morning, which raised the prospect that the Bank of Canada’s next move on interest rates may be up.

Statistics Canada said a rise in gasoline prices in March pushed the annual overall inflation rate to 2.3 percent from 2.0 percent in February.