Source: The Canadian Press

Stock markets continued to sell off Friday as fears of a widening government debt crisis in Europe overshadowed strong April job growth in North America that came in far above expectations.

The S&P/TSX composite index fell 150 points to 11,692.43 even as the Canadian economy cranked out 108,700 jobs in April, far above the 24,000 that economists had forecast.

However, the unemployment rate only dropped one-tenth of a point to 8.1% in April because more Canadians went looking for work, Statistics Canada said.

South of the border, the U.S. Labour Department reported the creation of 290,000 new jobs last month, again far more than the 180,000 expected.

The Canada, the dollar was up 0.77 of a cent at 95.8 cents US.

TSX commodity stocks suffered as investors continued to buy into the perceived safe haven of the U.S. dollar. Investors fear potential fallout if the European debt crisis can’t be contained within Greece and countries such as Portugal and Spain also need massive aid.

But investors also sold bank stocks as tighter credit conditions mounted while demand concerns punished transportation stocks.

Oil prices continued to lose ground Friday because of the rising U.S. dollar and the possibility that demand may fall if the debt crisis dampens the global recovery.

The June crude contract on the New York Mercantile Exchange was down $2 at US$75.11 a barrel, pushing the TSX energy sector down 1.2%. Overall, oil lost 14% this week from an intraday high of US$87.15 on Monday and the TSX energy sector was down 7.5%.

“If the world is a risky place and growth is in question, that hits commodities and that hits Canada hard,” said Patricia Croft, chief economist, RBC Global Management.

Suncor Energy (TSX:SU) lost 45 cents to $31.92.

Canadian Natural Resources (TSX:CNQ) fell 70 cents to $72. The oil and gas producer’s president, Steve Laut, said Friday that the company will complete as much engineering work as possible before giving its Kirby oilsands project the green light later this year. Turning a sharper focus to early engineering is a way it hopes to avoid the kind of cost overruns on Kirby that plagued the Calgary company’s massive Horizon open-pit mine, which came in billions of dollars over budget.

Other commodity prices were higher, including the June gold contract on the Nymex, ahead $13.10 at US$1,210.40 an ounce. However, gold stocks were the leading decliner on the TSX, with Barrick Gold Corp. (TSX:ABX) down $1.42 at $44.70.

Iamgold Corp. (TSX:IMG) said quarterly net earnings were US$58.8 million, up 12% from the US$52.2 million it earned the same 2009 quarter. Revenue was US$240.1 million, up from US$188.6 million, but its shares also declined, falling 38 cents to $18.47.

The base metals sector was slightly lower with July copper up three cents at US$3.14 a pound. Teck Resources (TSX:TCK.B) declined 34 cents to C$36.34, while FNX Mining (TSX:FNX) gave back 45 cents to $11.15.

The industrials sector backed off 1.83% with Canadian National Railways (TSX:CNR) down 94 cents at $58.16 and Canadian Pacific (TSX:CP) slipping 88 cents to $56.45.

The financial sector gave back almost 1% as Royal Bank (TSX:RY) was down 65 cents at $58.92.

Germany’s parliament on Friday approved Berlin’s share of Greece’s economic rescue package after a boisterous debate. However, investors still fear that Athens may not make a May 19 debt repayment deadline.

Investor concern goes far beyond the debt problems in Greece, the smallest economy in the European Union. A further loss of confidence in European government debt could have an impact on other weak countries like Portugal, potentially requiring another difficult bailout process.

“At this point in time, the amount of time it took for this to be addressed in a meaningful fashion was a lot longer than people expected,” said Paul Taylor, chief investment officer at BMO Harris Private Banking.

“And there are a number of other countries that are tenuous and with the Greek situation creating a bit of a crisis, your cost of borrowing goes up and the potential for other entities to, in fact default, goes through the roof,” Taylor said.

The debt crisis has already badly undermined Europe’s shared currency, the euro. Selling pressure on the euro abated somewhat with the currency trading around US$1.2738 Friday, up from US$1.2611 late Thursday.

Five straight days of losses have left the TSX down 518 points or 4.24% for the week, leaving the main index lower than where it started the year.