Canadian shares slide to lowest close in almost 8 weeks

Canadian shares fell Tuesday, taking theS&P/TSX Composite Index to its lowest level in nearly eight weeks as investors turned cautious after a sell-off in U.S. markets halted an impressive start to the year.

TheS&P/TSX Composite Index closeddown 0.9per cent to15,955.51pointsafter closing lower by 0.9 per cent on Monday.That is the biggest two-day drop since May.

The benchmark index is now down 1.6 per cent for the year which was the worst performance in developed markets.

Energy shares weighed on the benchmark index as crude oil prices tumbled for a second day after U.S. stockpiles were seen as expandingfor the first time in 11 weeks.

The price of crude oil fell $1.06 USto $64.50a barrel in New York.

Shares of heavyweights Cenovus Energy were down four per cent, while Encanaslumped 2.2per cent.

On the other end, shares of ThomsonReuters jumped as much as 10per cent on news it was in advanced talks with private equity firm Blackstone for a potential partnership in its financial-data and risk business.

It closed down over seven per cent.

The Canadian dollar, meanwhile,traded at an averageat 81.12US cents, upfromMonday's average price of 81.07.

U.S. stocks tumble

U.S. markets fell totheir biggest losssince Augustahead of the Federal Reserve's monetary policy meeting on Wednesday.

"Investors are getting a bit worried about inflation, whichhas led some people to believe that the Fed might be more aggressive when it comes to raising rates," Robert Pavlik, strategist at SlateStone Wealth told Reuters.

The Dow Jones Industrial Average fell 1.4per cent, or 362points, while the NasdaqComposite closed down 0.9per cent. The S&P500 index finished lower by1.1per cent.

GennadiyGoldberg, strategist at TD Securities told Reuters that investors initially were spooked by the two-day decline on Wall Street, which prompted a flight to the safety of U.S. government bonds.

The yield on the 10-year Treasury note rose to 2.72 per cent its highest level in almost four years.

Shares of health-care stocks took a big hit and were among the biggestlosersonbenchmark indexesafter a new venture was announced by Amazon, JPMorganChase and Warren Buffett's Berkshire Hathaway.

The world's biggest e-commerce retailer is teaming up with the two other major companies to create a company that helps its U.S. employees find quality care at "a reasonable cost."

The news sent shares of prescription drug makers, drug distributorsand health insurers into big losses.

Express Scripts lost over threeper centand UnitedHealth Group sank over4.3per cent.

Derek Holt, head of capital markets economics at Scotiabank, said markets are also seeing a rebalancingthat happens at the end of the month, when investors take holdings away from stocks to bonds.

"By week's end, we should have a better sense of whether recent market swings are somewhat transitory in nature or longer lived," he said.

Rest of the world

European shares closedlower despite economic data showing the euro zone economy grew at its fastest pace in a decade last year.

Analysts said the strong growth could help convince the European Central Bank to wind back its monetary stimulus program earlier than expected.

Britain's FTSE100 andGermany'sDAXlost aboutoneper cent each.

In Asia, Japan's benchmark Nikkei 225 index closed down 1.4 per cent, markingits first five-day losing streak since November, while Hong Kong's Hang Sengindex fell 1.1 per cent. The Shanghai Composite lost 0.8 per cent.