Canada's main stock index fell on Wednesday as energy stocks tracked a retreat in oil prices, with sentiment dented further by worries around higher inflation.

At 9:42 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was down 95.19 points, or 0.47%, at 20,088.24, a day after marking its best daily performance in nearly two weeks.

Leading the declines were the energy group down 2.8%, a day after the sub-sector index touched its highest level in nearly two and a half year.

Oil prices fell nearly 1% on Wednesday, but was at a multi-year high, above $83 a barrel, supported by OPEC+'s refusal to ramp up production more rapidly.

"It wouldn't be surprising to see Canadian markets drop back a little bit, given that the energy prices and the US market both coming down today," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Global markets were weighed by oil prices hitting their highest since November 2014, with investors anxious that spiraling energy costs could force central banks to raise rates more quickly to combat rising inflation.

Toronto index rebounds as energy stocks gains on oil rally

"Inflation is putting pressure on central banks to start raising interest rates, and we saw that last night in New Zealand, suggesting more central banks could start to raise rates next year and that could include the Bank of Canada," Cieszynski added.

The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.4% as gold prices edged lower pressured by a resilient dollar and higher US bond yields.

Highlights

Converge Technology Solutions Corp and Mullen Group Ltd were the biggest decliners on the index.

The TSX posted one new 52-week highs and no new lows.

Across all Canadian issues, there were eight new 52-week highs and nine new lows, with total volume of 47.28 million shares.