Stocks are slumping a bit Wednesday as traders worry about the effects of Canada’s strengthening currency on the economy. The S&P/TSX composite index is down 16 points to 7,105.

Volume is solid at 98 million shares, with the selling trumping the buying by about two to one. Market breadth is also notably negative, with losers outnumbering winners 11:8.

On a sector basis, gold stocks are leading the way lower, down about 1.7%. There is also weakness in diversifieds, materials, and energy. Modest gains are evident in consumer stocks.

Old economy firms and resource companies are taking hits today, primarily on currency concerns. EnCana is leading the energy group lower, down 1% at midday. Barrick is driving the golds lower, dropping 2.1%.

Potash has dropped more than 2%, and there is selling in Canadian Natural Resources, Bombardier, Compton Petroleum, Peyto Explorations, Enerplus, Provident Energy Trust and Cequel Energy.

Stelco is the day’s big loser, down 21% on heavy volume of 2.9 million shares, as traders react to its earnings warning from yesterday, and sour on its future prospects given the strong loonie.

Other losers include Nortel, Labopharm, and Alliance Atlantis.

On the upside, there is strength in transports, CP Rail and Air Canada. CP is cutting 820 jobs, and shaving its costs.

Techs are making modest gains, overcoming Nortel’s weakness, with gains in ATI, Sierra Wireless, Research in Motion and Celestica. Telesystem International is up about 20% in heavy trading. The only news on the stock is that a subsidiary, MobiFon Holdings B.V., has begun the private offering of US$230 million of senior notes.

Biomira is bouncing back nicely today, gaining 17%. And, there is strength in Legacy Hotels REIT.

In earnings news, Shermag reports that year-over-year net earnings more than doubled from 54¢ per share in fiscal 2001-2002 to $1.20 per share this year.

However, Sceptre Investment Counsel saw its second quarter earnings slump to $766,000, or 6¢ per share, compared with $1,624,000 for the same period last year. In response, it has cut its quarterly dividend to 5¢ from 7¢.

In New York, stocks opened sharply lower on some profit-taking, but much of the losses have been made back. The Dow Jones industrial average now sits down 11 points at 9,311. The S&P 500 is up a point at 1,013. The Nasdaq composite index is the bright spot, gaining 13 points to 1,681.

The S&P/TSX Venture index is higher too, gaining two points to 1,118. Volume is average at 17.4 million shares. VRB Power Systems is the day’s top trader, up1.5¢ to 22¢ on 816,000 shares.