TORONTO (Bloomberg) — Canadian stocks fell, led by financial companies including Royal Bank of Canada, after economic growth exceeded central bank estimates and sparked concern that the Bank of Canada will raise borrowing costs to rein in inflation."If rates were to go up, clearly there would be a short-term adjustment in the stock market," said Andre Chabot, who helps manage C$300 million at Triasima Portfolio Management in Montreal.

A measure of Canadian bank stocks fell 0.6 percent on the possibility that the central bank may raise interest rates. The government said the economy grew at the fastest pace since the third quarter of 2005, expanding at an annualized 3.7 percent.

The Bank of Canada hinted on May 29 that it may raise borrowing costs as early as July. Higher borrowing costs may decrease the value of bonds owned by financial companies and lessen demand for loans.

The Standard & Poor's/TSX Composite Index fell 24.93, or 0.2 percent, to 14,056.78 in Toronto. Losses in the S&P/TSX were minimised after gold prices jumped the most in month, sending shares of companies that mine for the metal higher.

"The outlook for commodities still looks quite good here," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages the equivalent of about $3.9 billion.

The declining value of the dollar against the euro boosted demand for precious metals as alternative investments. Barrick Gold, the biggest gold producer, rose 29 cents to C$31.08. Goldcorp rose C$1.21 to C$25.73.

Toronto-Dominion Bank, Canada's second-largest lender, dropped 77 cents to C$73.87. Royal Bank, the country's biggest bank, lost 55 cents to C$58.28.

Canadian Imperial Bank of Commerce was the biggest drag on the S&P TSX, after profits missed some analyst estimates. The shares lost C$3.47, slipping to C$102.67. Blackmont Capital analyst Brad Smith said profit excluding one-time items was C$1.95 a share, missing his estimate of C$1.98 a share.