North American markets struggled back from a sharp sell-off early Friday, but the S&P/TSX Composite Index still recorded its 10th consecutive losing session — off 34.58 points to 7,249.02.

Continuing worries about corporate earnings and a terrorist attack on a U.S. consulate in Pakistan. sent stocks tumbling at the open.

Even the May CPI report, which showed Canada’s CPI up just 1% in the year failed to please investors. It hid a more ominous “core” inflation rate figure of 2.2%– above the Bank of Canada’s ideal target for the “core” of 2%.

Seven of the 13 TSX sub-indices closed lower, led by a 1.36% drop in the telecommunications group and a 2.32% fall in diversified metals. The gold sector — the usual safe haven for skittish investors — surged 5.43%.

Telecom stocks were weak following a gloomy outlook from U.S. long distance phone company Sprint, which said growth in its wireless unit would fall below previous forecasts. Sprint PCS shares plunged US$1.59 to US$4.40.

Nortel ended the day up 11¢ at $2.56, battling back from an intraday low of $2.25.

Talisman Energy issued a statement in response to a request from the TSX for information about reports it was going to sell its Sudanese interests to India’s state-owned oil and gas company. The company reiterated its earlier comments that “all of the company’s assets are for sale at the right price”, but said it had nothing new to announce. Talisman shares were down 72¢ to $68.42.

Bullion prices rose US$1.30 to US$319.80. That powered golds higher. Barrick Gold was up $1.55 to $30.86. Placer Dome added $1.30 to $19.60.

Biovail was among the biggest gainers on the TSX, up $1.92 to $47.51. Among the biggest net losers: Potash Corporation of Saskatchewan. PCS was off $3.65 at $95.37 after it lowered its profit guidance.

Hurricane Hydrocarbons shares fell $1.15 to $16.60 after it announced that its US$100 million offer to buy an interest in a Kazakh oil pipeline had failed.

The financial sector was down 1% with Royal Bank off 75¢ at $55.15, while Scotiabank slid 65¢ to $51.15.

Gildan Activewear raised its profits and revenue guidance, and the stock shot up $1.30 to $35.15.

Toronto volume was 198.4 million shares worth $2.63 billion as decliners beat advancers 638 to 449 with 188 unchanged.

The junior TSX Venture Exchange gained 12.72 points to 1,196.53,

In New York, the Nasdaq Composite Index closed up 7.88 points at 1,504.74. The Dow Jones Industrial Average lost 28.59 points to close at 9.474.21. Early in the session the Dow was off more than 200 points. The S&P 500 index dipped 2.29 points to 1,007.28

U.S. market sentiment was negative from the start because of the Sprint warning, downgrades from several brokerages for the wireless sector, a lower-than-expected consumer sentiment figure from the University of Michigan, and the overnight bomb attack at the U.S. consulate in Karachi. Pakistan.

The Canadian dollar closed down 0.27¢ at US64.70¢.