Toronto stock market weakens as key commodity prices pull back

TORONTO – The Toronto stock market moved lower shortly after trading began on Thursday as a drop in gold prices contributed most to the decline.

The S&P/TSX composite index fell 62.83 points to 12,290.26, with nearly every major TSX sector lower.

The Canadian dollar rose 0.09 of a cent to 101.64 cents US.

The TSX gold sector fell 2.3 per cent as February gold bullion dropped $22.30 to US$1,695.60 an ounce.

Crude oil prices for January backed off 52 cents to US$86.25 a barrel on the New York Mercantile Exchange, pulling down the energy sector 0.5 per cent.

And copper prices also fell, with the March contract on the Nymex dropping 5.5 cents to US$3.71 a pound.

On Wall Street, the Dow Jones industrials slipped 15.36 points to 13,230.09, while the Nasdaq shed 4.57 points to 3,009.24 and the S&P 500 dropped 2.26 of a point to 1,426.22.

In U.S. economic data, the Commerce Department said Americans spent more on autos, electronics and building supplies in November, pushing retail sales up 0.3 per cent in last month. That offsets a 0.3 per cent decline in October.

And the U.S. Labour Department said fewer Americans applied for unemployment benefits last week, the fourth straight weekly decline. The seasonally adjusted figure of 343,000 was the lowest level in two months and the second-lowest total this year.

The data on declining unemployment applications, which suggests that companies are cutting fewer jobs, comes after the Federal Reserve for the first time ever tied its interest rate policy to unemployment as it aggressively attacks joblessness in the U.S.

The Fed said Wednesday that it will keep its key short-term interest rate near zero at least until the unemployment rate drops below 6.5 per cent and inflation rises to 2.5 per cent.

In Europe, markets barely reacted to news that European Union finance ministers had agreed to create a banking supervisor and that Greece had finally been approved to get more bailout cash to avoid bankruptcy. The euro was down 0.1 per cent at $1.3060.

The FTSE 100 index of leading British shares was down 0.2 per cent at 5,933 while Germany’s DAX fell 0.3 per cent to 7,594. The CAC-40 in France was 0.06 per cent higher at 3,595.

Earlier in Asia, Tokyo’s Nikkei 225 index jumped 1.7 per cent to close at 9,742.73 — an eight-month high — as the yen remained weak against the dollar, a boost for Japan’s export-reliant economy. The dollar was up a further 0.2 per cent at 83.44 yen.

Hong Kong’s Hang Seng shed earlier gains to close 0.3 per cent lower at 22,445.50 while South Korea’s Kospi rallied 1.4 per cent to 2,002.77.