Toronto stock market loses ground in volatile session as loonie inches lower

TORONTO – The Toronto stock market closed lower Monday, but well off earlier losses, in a volatile session weighed down by concerns about a global recession and the impact it would have on Canadian commodities.

The S&P/TSX composite index was down 25.43 points at 11,335.77, coming off earlier triple-digit losses as some of the weakness backed off from resource stocks.

The TSX Venture Exchange fell 13.04 points to 1,278.55.

The Canadian dollar slipped 0.03 of a cent to 96.18 cents US, near a 5-1/2 month low. The loonie has lost more than five cents in a little over a month as nervous traders avoided risk and flock to the U.S. Treasury and amid reduced expectations for a Canadian interest rate hike.

On the TSX, the information technology sector was the steepest decliner, down 1.6 per cent, as Research In Motion shares lost another six per cent, or 65 cents, to $10.03.

Energy stocks were down 0.12 per cent as the July crude contract on the New York Mercantile Exchange closed up 75 cents to US$83.98 a barrel.

Bullion prices for August ended lower with the contract falling $8.20 to US$1,613.90 an ounce.

On Wall Street, the Dow Jones industrial average dropped 17.11 points to 12,101.46. The Nasdaq composite index was up 12.53 points to 2,760.01 and the S&P 500 index gained 0.14 points to 1,278.18.

A U.S. Commerce Department report offered more reason to be concerned about the economy as companies placed fewer orders to U.S. factories for the second straight month with orders for factory goods down 0.6 per cent in April from March.

The North American stock market weakness followed a dismal session in Asia.

“For the better part of this year, concerns have been emanating out of Europe (about) potential for the government debt crisis there to become a financial catastrophe around the world,” said Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis, Mo.

“The focus is quickly (moving) toward the prospects for the global economy to really shift into a lower gear. That has a direct impact on commodity prices and resource prices, which is filtering its way back into the Canadian market, to some degree.”

In other commodities, the July copper contract on the Nymex rose two cents to US$3.33 a pound. Copper is widely viewed as a key economic barometer as it is used in so many industries and China has been the biggest purchaser of the metal.

Bullion prices for August were lower with the contract falling $8.20 to US$1,613.90 an ounce.

Over the weekend, an agreement involving BCE Inc. (TSX:BCE) and its financial backers will see Bell Canada add a minority ownership stake in 11 data centres in Alberta, British Columbia and Ontario to its holdings. The companies say the deal is valued at $1.1-billion, including assumed debt. Shares of BCE increased 23 cents to $41.12.

And Bombardier Transportation says it has signed a contract to manufacture 300 subway cars for New York City Transit in a deal valued at US$599 million. Bombardier Inc. (TSX:BBD.B) shares rose a penny to $3.68.

On Tuesday, the Bank of Canada is widely expected to leave its key rate unchanged at one per cent. But Bank of Canada governor Mark Carney could also end up discouraging any thought of a rise in interest rates this year because of slowing economic condition, as well as worries about the future of the eurozone and the health of banks in the region.

A report released Monday showed that unemployment in the 17 countries that use the euro currency stayed at a record-high 11 per cent in April.

Spain’s banks are in shambles, and Cyprus appears close to joining the club of bailed-out countries that already includes Greece, Portugal and Ireland.

Voters in Greek elections this month might choose leaders who intend to reject Europe’s bailout money and harsh spending cuts. That could lead to Greece’s expulsion from the euro, potentially rattling financial markets even more.

And there were signs that growth in China, which helped sustain the global economy through the 2008-2009 recession, is slowing significantly. China’s manufacturing weakened in May, according to surveys released Friday.