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TSX ends down 0.7% at 21,740.20

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Posts its lowest closing level since March 8

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Energy sector falls 1.7%

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Technology loses 1.3%

(Updates at market close)

By Fergal Smith

April 15 (Reuters) - Canada's main stock index fell to a

five-week low on Monday as long-term borrowing costs climbed and

investors worried that this week's federal budget would propose

raising taxes.

The Toronto Stock Exchange's S&P/TSX composite index

ended down 159.79 points, or 0.7%, at 21,740.20, its

lowest closing level since March 8.

"It's partially nerves over the upcoming budget," said

Michael Sprung, president at Sprung Investment Management.

"People are concerned about what the tax implications might be

given how much this government is spending."

Canadian Finance Minister Chrystia Freeland will have to

find ways to amp up savings or raise taxes when she delivers the

budget on Tuesday, as new heavy spending plans in the run-up

further risks weakening government finances, economists say.

U.S. stocks also fell as an early lift from a strong retail

sales report gave way to a jump in Treasury yields and concerns

about rising tensions in the Middle East.

"I think that inflation is going to prove to be a little bit

more persistent than people want and the amount of financing

that is going to be required from corporate, personal and

governments over the next few years is going to put pressure on

rates," Sprung said.

Canada's consumer price index report for March is also due

on Tuesday. It is expected to show inflation rising to an annual

rate of 2.9% from 2.8% in February.

The Toronto market's energy sector fell 1.7% as

the price of oil settled 0.3% lower to $85.41 a barrel.

The materials group, which includes metal miners

and fertilizer companies, was down 0.9% even as gold

climbed to a fresh record high.

Heavily weighted financials fell 0.6% and

technology was down 1.3%.