TORONTO - Moves by China to rein in strong economic growth and a disappointing earnings report from aluminum giant Alcoa Inc. pushed the Toronto stock market sharply lower Tuesday.

The Alcoa earnings raised worries that the economic recovery will be slower than expected while the Chinese action to curtail economic growth put pressure on commodity prices because of concerns about a possible slowing of demand.

Oil and mining stocks bore the brunt of the selling pressure as the S&P/TSX composite index tumbled 126.94 points to 11,820.18.

The Canadian dollar was 0.54 of a cent lower to 96.22 cents US.

After the market closed Monday, Alcoa said it earned one cent a share excluding one-time items and special charges. Analysts polled by Thomson Reuters, on average, forecast earnings of six cents per share.

Alcoa's revenue also fell -- although it beat expectations -- as higher metal prices were offset by ongoing weakness in the aerospace, construction and gas turbines businesses. Its shares were down $1.93 or 11.06 per cent to US$15.52.

"If commodities are serving to some extent as a leading indicator in this cycle ... if it's global demand or even non-North American demand that has been driving commodity prices higher, to see Alcoa suffer somewhat is a disappointment," said Steve Uzielli, portfolio manager, director Scotia McLeod equity advisory.

Commodity prices fell after the People's Bank of China increased the interest rate on its one-year bill by eight basis points to 1.84 per cent.

The rise was the second undertaken in the interbank markets in a week and provided a further hint that more substantial interest rate increases could be in the offing as China's economic growth accelerates.

"It (China) appears to be taking or making efforts to slow down the economy -- or (there) seems to be some risk that the economy slows as a result of these moves," observed Uzielli.

"And then that would be viewed negatively as it relates to their demand for commodities -- the things that have been driving our market."

With plenty of money sloshing around, soaring real estate prices in Beijing, Shanghai and other major cities have reawakened fears that asset bubbles and inflation could set the Chinese economy spinning.

China also raised the ratio of reserves banks must hold by 0.5 percentage points, reflecting concerns over a possible rise in inflation this year as the country's economy rebounds.

The base metals sector was the biggest decliner in Toronto, down 3.66 per cent as March copper lost nine cents to US$3.35 a pound. Teck Resources (TSX:TCK.B) stepped back $1.09 to $41.11 and HudBay Minerals (TSX:HBM) fell 43 cents to $14.43.

Shares in Grande Cache Coal Corp. (TSX:GCE) were down 71 cents or 10.47 per cent to $6.07 even as the company raised its 2010 production target to a range of between 1.6 million and 1.8 million tonnes of metallurgical coal, about six per cent higher than its previous guidance.

The TSX energy sector lost 1.39 per cent as the February crude contract on the New York Mercantile Exchange fell $1.73 to US$80.79 a barrel. Canadian Natural Resources (TSX:CNQ) dropped 90 cents to $73.58.

Shares in Suncor Energy Inc. (TSX:SU) fell 71 cents to $37.87 as the company said it was completely reworking the proposed Fort Hills oilsands mine, and won't discuss timing on the project's construction until at least next year. Suncor investor relations vice-president John Rogers told a BMO Capital Markets conference in London on Tuesday that the company will also lay off another 1,000 people this year following its merger with Petro-Canada.

The February bullion contract on the Nymex fell $22 to US$1,129.40 an ounce and the gold sector moved down 3.06 per cent. Barrick Gold Corp. (TSX:ABX) faded $1.08 to $41.92 and Goldcorp Inc. (TSX:G) backed off $1.31 to $42.54.

The tech sector also added to declines with Research In Motion Ltd. (TSX:RIM) down 92 cents to $65.75.

The TSX Venture Exchange was 31.36 points lower to 1,577.17.

U.S. markets also lost ground as New York's Dow Jones industrial average fell 36.73 points to 10,627.26, the Nasdaq composite index was down 30.1 points to 2,282.31 and the S&P 500 index was off 10.76 points to 1,136.22.

Investors also took in trade data that missed expectations.

Canada racked up a trade deficit with the rest of the world of $344 million in November because of a 3.9 per cent surge in imports. The showing reversed a $503-million surplus in October.

And the U.S. trade deficit jumped 9.7 per cent to US$36.4 billion, the highest level in 10 months. Exports rose 0.9 per cent, the seventh consecutive monthly gain, as demand was up for American-made autos, farm products and industrial machinery. Imports, however, rose a much faster 2.6 per cent, led by a 7.3 per cent rise in petroleum imports.

In other corporate news, Canada Bread Company Ltd. (TSX:CBY) said it plans to close three Toronto bakeries over the next three years and move their production to a new plant somewhere in southwestern Ontario. The company says employees will have an opportunity to apply for the 300 positions at the new bakery. Its shares were unchanged at $55

Video game publisher Electronic Arts Inc. did not see a rebound in sales during the most recent quarter. It slashed its full-year earnings forecast after the markets closed Monday, saying ongoing weakness in game sales didn't improve over the holidays. Its shares lost $1.42 or 7.77 per cent to US$16.85.