Canadian shares lower as energy sector weighs on market

Canadian shares closedlower on Tuesdayas fallingmetals and oilprices weighed on the benchmark index.

The S&P/TSX Composite Index was down 0.5per cent to 16,298.88points at the end of the trading day.

Miners were among the biggest decliners as material stocks fell the most since October in early trading.

A stronger U.S. dollar, which is the currency that is used to price commodities,and supply issuesin China with stockpiles of metals such as iron orewere putting pressure on metal prices, according to analysts.

"Everything this year [in commodity markets] has beenlargely about the dollar," said Credit Agricoleforeign exchangestrategistManuel Oliveri.

Shares of Teck Resources and Kinross Gold were both down over four per cent.

On U.S. markets, the Dow Jones Industrial Average climbed past the 26,000 point mark for the first time in the morning, boosted by technology, healthcare and financial stocks. But by the afternoon, the benchmark index fell back below 26,000 to close flat at 25,792.86 points.

Oil falls from high

Canadian energy shares felt the pinch after oil prices, which were at three-year highs,fellfor the first time in six days.

Analysts said oil's pullback on Tuesday after several days of gains was largely due to investors embarking onprofit- taking.

Benchmark U.S. crude fell to $63.73US per barrel in New York.

Shares of heavyweights such as CenovusEnergy were down over four per cent, while EncanaCorp.fell five per cent.

Loonie higher ahead of rate decision

The Canadian dollar, meanwhile,traded in a rangeagainstits U.S. counterpart a day before the Bank of Canada's decision on interest rates.

The average value for the loonie was at 80.52cents US, upfrom Monday's average of 80.50 cents US.

While markets are pointing tothe likelihood of a rate hike by the Bank of Canada on Wednesday, Shaun Osborne, chief foreign exchange strategist at Scotiabank,said he thought the central bank would make no move on interest rates but would talk in its monetary policy reportabout the potential for future hikes.

"A more cautious approach to the immediate policy outlook is reflected in a range of factors NAFTA risks remain significant, the immediate data run beyond the jobs numbers has been a little less impressive, the idea that the Bank of Canada "can't disappoint" market expectations is dispelled by the September rate hike," he said.

If the bank decides to keep interest rates unchangedtomorrow but gives a strong indication of more hikes this year, Osbornethinks weakness in the Canadian dollar would be limited before selling of the U.S. dollar re-emerges.

Elsewhere,bitcoin's plunge overnight on fears of a regulatory crackdown in South Korea saw most cryptocurrenciespost double digit losses.