Financial sector concerns, economic worries depress stock markets

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market moved lower Tuesday, continuing a trend from the last week as investors took profits amid worries over whether economic conditions can support the sharp gains racked up since March.

The S&P/TSX composite index lost 74.4 points to 10,803.9 after drifting 32 points lower on Monday, adding up to a loss of over five per cent over the last seven sessions.

The Canadian dollar drifted 0.22 of a cent lower to 92.56 cents US.

The energy sector was a leading decliner, down 1.44 per cent as oil prices turned lower after advancing strongly Monday on the strength of the latest readings on the U.S. manufacturing sector and housing resale data. The December crude contract on the New York Mercantile Exchange moved down $1.26 to US$76.87 a barrel. On the TSX, EnCana Corp. (TSX: ECA.TO) declined 90 cents to C$59.27.

The base metals sector fell 2.5 per cent as the December copper contract on the Nymex fell four cents to US$2.90 a pound. Teck Resources (TSX: TCK-B.TO) dropped $1.10 to C$30.04.

The December gold contract on the New York Mercantile Exchange gained $3.50 to US$1,057.50 an ounce and the gold sector was ahead 0.54 per cent.

The financial sector was 1.17 per cent lower as investor unease grew amid further efforts to restructure two of the U.K.'s largest banks. Lloyds said it was looking to raise about $34 billion through a share issuance, while the Royal Bank of Scotland got a $41 billion infusion from the government.

And Swiss bank UBS AG reported a third-quarter loss of about $542 million, due to hefty accounting charges.

"Stocks are registering losses as the market takes risk off the table in the wake of another run of bad news from the banking sector," said Jane Foley, research director at Forex.com in London.

That raises fears that major economies "will only be able to manage lacklustre growth going forward," Foley said.

In Toronto, TD Bank (TSX: TD.TO) moved 65 cents lower to C$62.10.

The TSX Venture Exchange gave back 1.57 points to 1,288.05.

New York indexes also moved lower amid uncertainty about a raft of key economic developments later this week, which culminates in Friday's closely watched U.S. non-farm payrolls report for October. Statistics Canada also releases October employment data Friday.

And ahead of those announcements, the U.S. Federal Reserve is holding its scheduled meeting on interest rates and will issue a statement on rates and the economy Wednesday afternoon.

The Dow Jones industrial average declined 46.9 points to 9,742.6 after gaining 77 points on Monday.

The Nasdaq composite index moved 12.46 points lower to 2,036.74 while the S&P 500 index lost 5.85 points to 1,037.05.

The TSX industrial sector was also positive, up 0.5 per cent after Warren Buffet's Berkshire Hathaway said it was buying Burlington Northern Santa Fe in a deal valuing the railroad at $34 billion.

Berkshire Hathaway Inc. already owns a stake of about 22 per cent in Burlington Northern, and says it will pay $100 a share for the rest of the company. That is a 32 per cent premium over Burlington's closing price on Monday. The deal sent Canadian railway stocks higher with Canadian National Railway (TSX: CNR.TO) ahead $1.29 to C$54.16 while Canadian Pacific Railway (TSX: CP.TO) advanced $1.16 to $48.38.

In other corporate news, health care products maker Johnson & Johnson announced plans to cut up to seven per cent of its global work force and streamline its business structure to save up to US$900 million next year.

MasterCard says its third-quarter profit came in at $452.2 million, reversing a year ago loss of $193.6 million.

However, worldwide purchase volume grew only 0.4 per cent, providing further evidence a global economic recovery is moving slowly.

On the Canadian earnings front, Talisman Energy Inc. (TSX: TLM.TO) saw its profits plunge in the third quarter as falling commodity prices and lower production output took their toll on earnings. The company reported a net income of $30 million or three cents per share, a significant drop from a year-ago profit of $1.4 billion or $1.40 per share. Talisman revenue was $1.5 billion, down from $2.7 billion in the same period last year and its shares fell 53 cents to $17.80.

Increased gold production combined with higher metal prices helped Northgate Minerals Corp. (TSX: NGX.TO) narrow its losses in the third quarter as revenues rose. Northgate posted a net loss of $8.6 million, an improvement from a year-ago net loss of $29.4 million. Quarterly revenues totalled $120.2 million, up from $99.3 million a year ago and Northgate shares lost three cents to $2.76.

And the U.S. Federal Trade Commission is taking a second look at a proposed sale of MDS Analytical Technologies to Danaher Corp. (NYSE: DHR). Toronto-based MDS Inc. (TSX: MDS.TO) announced in September that it planned to sell its global subsidiary to Danaher for US$650 million. The sale was originally expected to close by the end of the year but now MDS expects a delay until the first quarter of 2010 and its shares declined 22 cents to C$8.48.

In overseas trading, Hong Kong's Hang Seng led Asia's losses, falling 1.8 per cent while Japan's market was closed for a holiday.

China's Shanghai index bucked the trend, gaining 1.2 per cent.

London's FTSE 100 fell 1.7 per cent, Frankfurt's DAX slid 1.42 per cent while the Paris CAC 40 moved down 1.85 per cent.