Toronto stocks continued to fall Thursday, as energy shares were hit by easing oil prices. Meanwhile, U.S. markets slumped as the latest reading of gross domestic product growth came in below expectations.

At midday, the Toronto Stock Exchange’s S&P/TSX composite index was down 45.64 points or 0.49% at 9277.88 after losing 104 points Wednesday. The TSX Venture Exchange slipped 24.19 points or 1.41% to 1686.11.

The Dow Jones industrials declined 59.49 points or 0.58% at 10139.31 after moving up 47.67 points in the previous session. The Nasdaq fell 13.65 points or 0.71% to 1916.78 and the S&P 500 index eased 5.90 points 0.51% to 1150.48.

The Canadian dollar continued to drop in the wake of the agreement between Prime Minister Paul Martin and the New Democratic party that $4.6 billion in new social spending will be inserted into the budget. The currency moved down 0.1 cents at US79.94¢ after giving up a quarter of a US cent Wednesday.

In Toronto, the TSX energy group eased 1.48% on oil prices that fell for the fourth day to below US$51 a barrel, extending Wednesday’s near 5% drop after U.S. government data showed a big rise in crude inventories. Among the bigger losers was Imperial Oil Ltd., down $2.92 or 3.21% to $87.98.

The slump by the energy group outweighed firmer financial stocks. They were up 0.27%, led by IGM Financial Inc., which added 64¢ or 1.70% to $38.25.

In New York, investors raised yet more questions about the strength of the economy, despite robust earnings results and higher forecasts from Procter & Gamble Co. and Northrop Grumman Corp.

Distracting investors from the mostly positive corporate news, the disappointing GDP report renewed inflation worries and fueled concern that Federal Reserve policy makers would take a more aggressive posture on rates when they meet next week. In the face of rising energy prices and weaker consumer and business spending, the Commerce Department said GDP grew at an annual rate of just 3.1% in the first quarter, the slowest pace of expansion in two years.

Procter & Gamble gained $1.72 or 3,21% to US$55.25 after the nation’s largest household products maker reported strong earnings driven by volume increases across all business units, and raised its forecast for the rest of 2005.

Northrop Grumman, the world’s largest shipbuilder, also topped expectations with robust first quarter earnings thanks to solid sales growth, higher operating profit across all segments and lower corporate and interest expenses. Northrop Grumman, which also raised its forecast for the year, rose $1.06 to US$54.56.

Overseas, Japan’s Nikkei stock average rose 0.03%. In afternoon trading in Europe, France’s CAC-40 slid 0.42%, Britain’s FTSE 100 fell 0.01% and Germany’s DAX index was down 0.13%.