Toronto stock market takes hit as commodities weaken on higher greenback

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(The Canadian Press)

By David Friend, The Canadian Press

TORONTO - Toronto's main index was stuck in negative territory Friday afternoon as investors hesitated to lift commodities prices higher after an exuberant climb in recent sessions.

The S&P/TSX composite index shifted 72.17 points lower to 11,412.34, after four consecutive sessions of gains.

The Canadian dollar was at 95.82 U.S., rising 0.78 of a cent.

On the TSX, gold stocks took a beating and dropped 1.8 per cent. The December gold contract on the New York Mercantile Exchange finished the day $7.60 lower to US$1,047.80 an ounce.

Gold has been climbing in recent sessions as investors turned to commodities futures contracts as a safe haven from the declining U.S. dollar. This week alone, gold futures have climbed more than four per cent.

Gold "had a big run and today it's just a bit of pullback. There's no clear direction as a result of today's actions," said Chris King of Morgan, Meighen and Associates.

"Some people are using it has a hedge for declines in the U.S. purchasing power, but I believe (others) are getting caught out by a short squeeze."

The U.S. dollar launched a rebound on Friday after Federal Reserve chairman Ben Bernanke reassured markets that the U.S. central bank will wind down its extraordinary stimulus measures when the time is right. His comments were interpreted by some as a sign the Fed could boost interest rates sooner than anticipated.

The TSX energy sector down 0.6 per cent as the November crude contract traded up 34 cents to US$72.03 a barrel.

Meanwhile, Statistics Canada reported the unemployment rate fell for the first time in almost a year in September to 8.4 per cent as the economy created jobs for the second consecutive month.

On Wall Street, markets were positive with the Dow Jones industrials 52 points higher to 9,839. The Nasdaq composite index rose 10 points to 2,134 while the S&P 500 index gained three points to 1,069.

The U.S Commerce Department said the trade deficit declined 3.5 per cent to $30.7 billion in August, as imports fell on lower oil demand. Economists expected the deficit to rise to $33 billion, or 3.3 per cent from July's level, which was the highest in six months.

In Canada, shares of Bombardier (TSX: BBD-B.TO) traded at their highest level in nearly a year, up 15 cents to $5.25, despite concerns about future financial results for the global aircraft and rail equipment manufacturer.

Discount retailer Dollarama Inc. (TSX: DOL.TO) began trading on the TSX on Friday and its stock was priced at $19.38 in the afternoon. The opening day trading price was above its $300 million initial public offering, which was valued at $17.50 per share.

Life sciences company MDS Inc. (TSX: MDS.TO) said it will sell its 600-employee Central Labs operation for $8 million to $12 million to Czura Thornton, a private investment group based in Jersey, Channel Islands. The company's shares were down 11 cents to $9.04.

Next week, investors will be assessing a spate of earnings reports from major U.S. companies including financial firms like JPMorgan Chase&Co., Citigroup Inc. and Bank of America Corp. Better-than-expected earnings from banks this year have been a big factor in the market's rally in the United States.