May 19 (Reuters) - Canada's main stock index fell to a two-week low on Tuesday as worries about the inflationary impact of higher oil prices boosted long-term borrowing costs, with gold mining and consumer discretionary shares among the biggest decliners.
The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE), ended down 92.11 points, or 0.3%, at 33,741.24, marking its lowest closing level since May 5.
Wall Street's main indexes posted steeper losses as the benchmark 10-year Treasury yield climbed to its highest level in more than a year.
"The fact that oil remains expensive I think is a main factor and the inflationary expectations of people are going higher," said Michael Sprung, president at Treegrove Investment Management.
"We almost have a situation where the global developed economies are somewhat diverging from the financial markets because the financial markets overall have been hanging in pretty well at fairly rich valuations."
Canada's consumer price index increased at an annual rate of 2.8% in April, up from 2.4% in March, driven largely by a surge in gasoline prices after the Iran war pushed global oil prices sharply higher.
Underlying price pressures slowed, however, which helped cool bets on Bank of Canada interest rate hikes.
The materials group (.GSPTTMT), which includes metal mining shares, fell 3.9% as gold and copper prices declined.
Barrick Mining (ABX.TO), has increased Ebola precautions at its Kibali gold mine in eastern Democratic Republic of Congo, a spokesperson told Reuters. The gold miner's shares were down 2.8%.
The consumer discretionary sector (.GSPTTCD), lost 1.3%, with shares of clothing retailer Aritzia Inc (ATZ.TO), ending 3.8% lower.
Gains for energy (.SPTTEN), capped the TSX's losses, with the sector adding 2.3%. Oil settled down 0.8% at $107.77 a barrel but remained near the top of its range this month.
Reporting by Fergal Smith in Toronto and Tharuniyaa Lakshmi in Bengaluru; Editing by Maju Samuel, Sahal Muhammed and Deepa Babington
