Stock markets negative as September U.S. jobless data disappoints

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market was lower mid-morning Friday as investors opted to take some profits from recent sharp gains after U.S. employment data for September widely missed expectations.

The S&P/TSX composite index was initially down 200 points but later settled down to a loss of 59.4 points to 11.012.4 after the U.S. Labour Department reported that job losses came in at 263,000. That was far more than the approximately 180,000 that economists expected while the unemployment rate increased a tenth of a point to 9.8 per cent, the highest level since June, 1983.

The data further called into question the strength of an economic recovery and whether the stock market can continue to build on the sharp gains racked up almost without a break since early March.

The drop on the TSX followed a 323-point plunge Thursday in the wake of a weak reading on the U.S. manufacturing sector and jobless insurance claims.

Hopes for a strong rebound have fuelled the strong rise in markets this year. The TSX's main index alone surged almost 10 per cent during the third quarter.

"Bottom line, this could spark a new downtrend for stocks at least during the early part of October," said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ont.

"If the S&P500 breaks and closes below 1,010 today, that would mark a breach of the upward trend that has been in place since March."

The Canadian dollar headed higher, rising 0.05 of a cent to 92.27 cents US after losing 1.19 cents on Thursday.

The financial sector was the leading decliner, down 1.43 per cent. Royal Bank fell 69 cents to $55.45.

TD Bank says it will reimburse customers who incur fees because of computer problems that have delayed transaction postings all week. The bank says the problem came about as it tries to integrate the computer systems of the old TD Banknorth and Commerce Bank. Toronto-based TD Bank Financial Group (TSX: TD.TO), TD Bank's parent company, bought New Jersey-based Commerce Bancorp for US$8.5 billion last year and its shares slid $1.01 to $65.69.

Early losses in energy sector moderated, falling 0.8 per cent as the November crude contract on the New York Mercantile Exchange slipped 99 cents to US$70.83 a barrel. Canadian Natural Resources (TSX: CNQ.TO) lost $1.04 to $68.77.

The TSX Venture Exchange slipped 11.06 points to 1,237.65.

American markets were also negative but well off early lows as the Dow Jones industrial average fell 39 points to 9,470.3 after losing 203 points Thursday.

The Nasdaq composite index dropped 4.3 points to 2,053.18 while the S&P 500 index shed 6.6 points to 1,023.25.

The TSX industrials sector moved down 1.28 per cent. Bombardier Inc. (TSX: BBD-B.TO) declined 12 cents to $4.76.

Magellan Aerospace Corp. (TSX: MAL.TO) said Thursday that it has signed a deal to build components for Airbus' new A350 XWB aircraft. Financial terms of the deal were not immediately available and its stock moved three cents lower to $1.50.

The base metals sector lost 0.66 per cent while December copper moved down five cents to US$2.69 a pound. But HudBay Minerals (TSX: HBM.TO) gained 14 cents to $12.44.

The gold sector was the only positive group, up 1.7 per cent as the December bullion contract on the Nymex shook off early losses to advance $5.50 to US$1,006.20. Barrick Gold advanced 45 cents to $39.66.

In other corporate news, the Globe and Mail reported that National Post chief executive Paul Godfrey has lined up financial backers to make a bid for daily newspapers owned by CanWest Global Communications Corp. (TSX: CGS.TO). Canwest stock surged three cents or 14.6 per cent to 23.5 cents.

Canwest has been trying for months to sell assets in order to free itself from a huge debt load, largely taken on to acquire the former Southam newspapers from a company controlled by former media baron Conrad Black.

Pengrowth Energy Trust (TSX: PGF-UN.TO) is cutting its monthly distributions to unitholders by 30 per cent starting with its November payment to help fund an increase in capital spending. The trust will pay seven cents per unit, down from 10 cents, starting with its Nov. 16 cash distribution and its units fell 68 cents to $10.34.

QLT Inc. (TSX: QLT.TO) shares rose 17 cents to $4.02 after it said Thursday that it has sold its U.S. subsidiary QLT USA Inc. to Tolmar Holding Inc. in a deal worth up to US$230 million. QLT USA's principal asset is the Eligard line of products for the treatment of prostate cancer.

Oncolytics Biotech Inc. (TSX: ONC.TO) has approval to conduct a Phase 3 trial of a treatment for head and neck cancers using the company's Reolysin drug in combination with chemotherapy. The news sent its stock surging 69 cents or 21 per cent to $3.87.

Overseas, London's FTSE 100 index fell 1.25 per cent, Frankfurt's DAX lost 1.67 per cent while the Paris CAC 40 lost two per cent.

Asian markets fell ahead of the release of the U.S. employment report.

Japan's Nikkei 225 average dropped 2.5 per cent with shares of carmakers like Toyota and Nissan especially hard hit. Hong Kong's Hang Seng lost 2.8 per cent being closed Thursday for a national holiday.