TSX lower, N.Y. flat as more U.S. jobs were lost in September than expected

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market was sharply lower and headed for its second weekly loss in a row as disappointing U.S. jobs data missed expectations, raising even more doubts that the surge in stocks since early March can be sustained.

The S&P/TSX composite index was down 82.3 points to 10,989.5 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. The U.S. unemployment rate increased a tenth of a point to 9.8 per cent, the highest level since June, 1983.

"There's been a lot of talk, particularly in the last couple of months, that we're seeing a turnaround in unemployment, and obviously that's not the case," said Dan Cook, senior market analyst at IG Markets in Chicago.

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 surged almost 10 per cent in the third quarter alone.

The Canadian dollar headed higher, rising 0.13 of a cent to 92.34 cents US after losing 1.19 cents on Thursday.

The financial sector was the leading decliner, down 1.4 per cent. Scotiabank (TSX: BNS.TO) fell $1.48 to $46.55.

TD Bank (TSX: TD.TO) shares were down $1.57 to $65.13 after it said it will reimburse customers who incur fees because of computer problems at a U.S. subsidiary that have delayed transaction postings all week.

The bank said the problems came about as it integrated the computer systems of the old TD Banknorth and Commerce Bank, which TD acquired last year.

The energy sector also pulled down the TSX, falling one per cent as the November crude contract on the New York Mercantile Exchange slipped $1.16 to US$69.66 a barrel. Canadian Natural Resources (TSX: CNQ.TO) lost $1.32 to $68.49.

The TSX Venture Exchange slipped 8.95 points to 1,239.76.

U.S. markets were flat as the Dow Jones industrial rose 9.1 points to 9,5189.3 after losing 203 points Thursday. The Nasdaq composite index edged up 0.9 of a point to 2,058.38 while the S&P 500 index shed 0.85 of a point to 1,029.

In yet another dose of tepid economic data, the U.S. Commerce Department reported that new orders to U.S. factories fell in August by 0.8 per cent, the largest amount in five months. Economists had expected a gain of 0.7 per cent.

The TSX industrials sector moved down almost one per cent. Bombardier Inc. (TSX: BBD-B.TO) declined 10 cents to $4.78.

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 12 cents lower to $1.41.

The base metals sector lost 0.6 per cent while December copper moved down 5.5 cents to US$2.68 a pound. But HudBay Minerals (TSX: HBM.TO) gained 32 cents to $12.62.

There were gains in the utilities, consumer staples and the gold sector, up 0.2 per cent as the December bullion contract on the Nymex shook off early losses to advance $3.60 to US$1,004.30.

In other corporate news, the Globe and Mail reported that National Post chief executive Paul Godfrey had lined up financial backers to make a bid for daily newspapers owned by CanWest Global Communications Corp. (TSX: CGS.TO). Canwest stock surged eight cents or 39 per cent to 28.5 cents even as CanWest said its papers are not for sale.

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) units fell 75 cents to $10.27 after announcing it would cut its monthly distributions to unitholders by 30 per cent starting with its November payment to help fund an increase in capital spending.

QLT Inc. (TSX: QLT.TO) shares rose 51 cents or 16.8 per cent to $4.36 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 47 cents or 14.78 per cent to $3.65.

Enbridge Inc. (TSX: ENB.TO) shares were up eight cents to $40.99 after signing a deal to acquire a 20-megawatt solar energy project near Sarnia, Ont., being built by First Solar Inc. (Nasdaq: FSLR).