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A TSX tote board is pictured in Toronto in this file photo.Frank Gunn/The Canadian Press

Canada's main stock index pulled back on Tuesday from its highest close in four months as a drop in commodity prices weighed on the shares of oil and mining companies.

The Toronto Stock Exchange's S&P/TSX composite index finished down 42.11 points, or 0.3 per cent, at 15,474.12.

Industrial stocks were the lone gainers among the TSX's top 10 sectors

The index posted on Monday its highest close since May 12 at 15,516.23.

The energy group, which has rallied more than 15 per cent since late August, declined 0.3 per cent.

Global oil prices struck a 26-month high but then fell on profit-taking.

Shares of petroleum and gas pipeline operator Enbridge Inc fell 0.2 per cent to $50.94. Regulatory hearings for the company's $8.2-billion Line 3 crude oil pipeline upgrade are to begin in the U.S. state of Minnesota, the last hurdle for the project.

The materials group, which includes precious and base metals miners as well as fertilizer companies, lost 1 per cent as a pullback in the price of bullion weighed on gold mining stocks.

Spot gold was down 1.13 per cent at $1,295.28 per ounce, while U.S. gold futures for December delivery settled down 0.75 percent at $1,301.70. Investors were booking profits after rising tensions between North Korea and the United States pushed the metal to a one-week high.

Shares of Bombardier Inc rose 6.1 per cent to $2.27 ahead of a U.S. trade court's preliminary ruling, expected to be made public on Tuesday, on Boeing Co's complaint that the company is dumping its new CSeries passenger jet in the U.S. aircraft market.

Still, the planemaker aims to close deals with Chinese airlines in time for an expected trip by Canadian Prime Minister Justin Trudeau to China next month, a senior Bombardier executive said.

The financials group, which accounts for more than one third of the index's weight, dipped 0.2 per cent. Consumer staples shares were down 0.3 per cent.

The S&P 500 ended flat on Tuesday and the Nasdaq posted modest gains as technology shares bounced from sharp losses in the prior session and comments from Fed Chair Janet Yellen boosted expectations of a December rate hike.

Yellen said the Fed needs to continue gradual rate hikes and it would be imprudent to leave rates on hold until inflation reached the Fed's 2-percent target.

Earlier in the session, Atlanta Fed Chief Raphael Bostic, a non-voting member this year, said he would want "clear evidence" that prices were firming before committing to another rate increase, but did not rule out another hike in 2017.

Chances of a rate hike in December rose to 78 per cent from about 40 per cent a month ago, according to CME Group's FedWatch tool.

"Investors should be looking out for a December hike given we don't know what happens to the Fed chair position next year. (Yellen), probably wants to be able to, knowing anyone new in that role might not feel comfortable tightening the first month," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

Economic data showed U.S consumer confidence fell in September while home sales dropped to an eight-month low in August due to the impact of Hurricanes Harvey and Irma.

The Dow Jones Industrial Average fell 10.05 points, or 0.05 per cent, to 22,286.04, the S&P 500 gained 0.23 points, or 0.01 per cent, to 2,496.89 and the Nasdaq Composite added 9.57 points, or 0.15 per cent, to 6,380.16.

Technology, up 0.4 per cent, was the best performing major sector, recovering somewhat from losses in the prior session. Tech shares suffered their worst one-day drop in five weeks on Monday as concerns over tensions with North Korea prompted investors to book profits in what has been the best performing sector this year.

Apple rose 1.72 per cent after four straight sessions of losses to help prop up the three major indexes, after Raymond James boosted its price target on the iPhone maker to $180 from $170.

"It is a little bit of a relief knowing perhaps investors still believe in buying the dips even after the Fed's announcement of reduced balance sheet purchases," said Ablin.

President Donald Trump warned North Korea any U.S. military option would be "devastating" for Pyongyang, but said the use of force was not Washington's first option to deal with the North's ballistic and nuclear weapons program.

Darden Restaurants slumped 6.53 per cent after the Olive Garden parent said it expected the negative effects on sales and earnings from Hurricane Irma to be about double that from Hurricane Harvey.

Red Hat rose climbed 4.09 per cent after the Linux distributor's quarterly profit came in above estimates and the company raised its full-year forecast.

Oil prices ended 1 per cent lower on Tuesday after investors took profits following a rally to 26-month highs spurred largely by threats from Turkey to cut crude exports from Iraq's Kurdistan region.

The market was also under pressure ahead of weekly U.S. oil inventory data that was expected to show a fourth straight week of crude builds.

Brent settled 58 cents, or 1 per cent, lower at $58.44 a barrel after hitting $59.49, its highest since July 2015 and more than 34 per cent above their 2017 low.

U.S. crude futures closed 34 cents, or 0.7 per cent, lower at $51.88 a barrel, after hitting a five-month high of $52.43.

Turkish President Tayyip Erdogan repeated a threat to cut off the pipeline that carries 500,000-600,000 barrels per day (bpd) of crude from northern Iraq to the Turkish port of Ceyhan, intensifying pressure on the Kurdish autonomous region over its independence referendum.

This potential loss, combined with 1.8 million bpd of output reductions by the Organization of the Petroleum Exporting Countries and non-OPEC producers, raised concerns of tighter supply.

The Iraqi government said it will not hold talks with the Kurdistan Regional Government about the results of the referendum, which is expected to show a comfortable majority in favor of independence after the results are announced later this week.

The rally led to profit-taking.

"The market was approaching if not in overbought territory," Robert Yawger, director of energy futures at Mizuho Americas.

And other analysts were skeptical about further price gains due to increased refining and higher crude output from the United States.

"The refined products led the way up the past few weeks," said John Kilduff, a partner at Again Capital LLC. "Now that we see refineries coming back online that should take the scarcity premium out of the market, refined prices will fall, and that will bring oil down with it."

U.S. refinery utilization was expected to rise 3.6 percentage points from 83.2 percent of total capacity in the week ended Sept. 15, according to a Reuters poll on Tuesday.

U.S. crude stocks likely rose 3.4 million barrels, analysts polled estimated ahead of weekly inventory reports from the industry group American Petroleum Institute (API) and the U.S. Department of Energy's Energy Information Administration (EIA), respectively released on Tuesday and Wednesday.

U.S. crude supplies have been rising as imports and production recover in the aftermath of Harvey, while refineries have been slower to restart.

The EIA said last week that U.S. crude stocks jumped 4.6 million barrels as imports increased by 734,000 bpd and production rose 157,000 bpd to 9.51 million bpd, close to levels before Harvey hit Texas on Aug. 25.

"The all-time record (for domestic production) is 9.61 million June 2015, last week's report was 100,000 barrels off of that," said Yawger, "With that in mind no one wants to ride that long position into the EIA report."

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