The Toronto Stock Exchanger's main index fell more than 200 points on Friday as financial issues were hurt by inflation fears and worries over more mortgage-related problems, while consumer stocks also weakened.

The S&P/TSX composite index <.GSPTSE> fell 209.48 points, or 1.42 percent, to close at 14,580.67.

Inflation worries weighed on both financials and consumer stocks, after Bank of Canada Governor Mark Carney said late on Thursday that strong energy prices could lead to higher inflation.

"There's some worry that interest rates may not fall any further, and may even start to rise, which in turn would squeeze the banks' margins," said Gavin Graham, chief investment officer at Guardian Group of Funds.

The heavily-weighted financial subgroup fell 2.34 percent, while the consumer discretionary and consumer staples groups fell 2.61 percent and 2.46 percent, respectively.

Also hurting bank shares were rumors that U.S. commercial bank Merrill Lynch may issue a profit warning and take additional writedowns on its mortgage holdings.

Among financials, Canadian Imperial Bank of Commerce fell C$1.87, or 2.9 percent, at C$61.63, while insurer Manulife Financial dropped C$1.12, or 2.9 percent, to C$37.13.