The Canadian Press

The Toronto stock market closed sharply lower Monday after the U.S. dollar rebounded against major currencies including the Canadian dollar and sent commodity prices falling.

The S&P/TSX composite index lost 147.25 points to 11,234.88 after investors took profits and sent the main index down just over 1% last week.

Richard Ross, global technical strategist at Auerbach Grayson in New York, said the direction of the dollar and volatility continue to drive trading.

“You’re seeing this sort of waltz between the dollar and volatility and stocks,” he said.

The Canadian dollar fell 1.35¢ to US93.72¢. The currency had fallen in the last two sessions after Bank of Canada governor Mark Carney reiterated late last week that the currency’s recent sharp rise threatens to derail the economic recovery. And he made it clear that intervention in currency markets to control that surge is a possibility.

The stronger greenback pushed the December crude contract on the New York Mercantile Exchange down $1.82 to US$78.68 a barrel, taking the TSX energy sector down 1.64%. Canadian Natural Resources (TSX:CNQ) gave back $1.03 to $73.40 while Suncor Inc. (TSX:SU) lost 76¢ to $37.61.

Other commodities also turned weak.

The base metals sector retreated 2.68% as December copper slipped 2.35¢ at US$3.01 a pound. On the TSX, Teck Resources (TSX:TCK.B) declined 75¢ to $34.06 and HudBay Minerals (TSX:HBM) closed down 53¢ to $14.40.

The December bullion contract on the Nymex moved down US$13.60 to US$1,042.80 an ounce and the gold sector was down 2.94%. Goldcorp Inc. (TSX:G) fell $1.23 to $40.95.

Iamgold Corp. (TSX:IMG) shares lost 34¢ to $14.15 as the company increased its 2009 production guidance by 3.3% to between 940,000 and 950,000 ounces of gold at an average cash cost of between US$460 and US$470 per ounce.

The financial sector was also a weight, down almost 1% in the wake of the U.S. government’s closure of seven regional banks on Friday. Meanwhile, prominent banking analyst Richard Bove downgraded several major American banks.

On the TSX, Scotiabank (TSX:BNS) gave back 48¢ to $45.86.

Despite Monday’s slide, the main TSX index is still close to its highs for the year and is up more than 50% since the lows of early March.

Analysts think a positive earnings season is just the thing to give markets another lift, pointing to a recent string of strong U.S. reports that should be reflected in Canada.

“I’m going to say 80% or 90% of companies in the U.S. are meeting or exceeding targets,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier, observing that “the bar has been set quite low”.

“Now there are some of course that aren’t — but I don’t think it’s going to be much different for Canadians.”

In the coming week investors will take in reports from Canadian market heavyweights including utility TransAlta Corp. (TSX:TA), Canadian Pacific Railway (TSX:CP), Imperial Oil (TSX:IMO) and Nexen Inc. (TSX:NXY).

The TSX Venture Exchange was off 27.96 points to 1,305.95.

New York indexes also fell back with the Dow Jones industrial average down 104.22 points to 9,867.96.

The Nasdaq composite index moved down 12.62 points to 2,141.85 while the S&P 500 index dipped 12.66 points 1,066.94.

Investors also looked ahead to the U.S. government’s first reading on the economy in the third quarter later in the week.

The U.S. Commerce Department’s report on third-quarter gross domestic product, the broadest measure of the economy’s health, is due out Thursday. Economists predict the economy grew at an annual rate of 3.2% in the quarter, according to Thomson Reuters. That would mark the first quarter of growth after four straight declines.

In other corporate news, former Walt Disney Co. chairman Michael Eisner and Canadian media and communications company Rogers Communications (TSX:RCI.B) have formed an investment and distribution partnership.

As part of the deal, Rogers will have the exclusive Canadian rights to future projects from the new web video studio called Vuguru. Financial terms of the agreement were not disclosed.

Shares in Rogers, which reports its latest quarterly results Tuesday, inched up a penny to $28.90.

CI Financial Corp. (TSX:CIX) shares gained 16¢ to $19.85 as it announced it was selling investment dealer Blackmont Capital Inc. to Australian-based Macquarie Group. for $93.3 million. Blackmont operates a network of about 130 investment advisers who provide services to retail investors.

Jien Canada Mining Ltd. says it still holds the best offer to take over Canadian Royalties Inc. (TSX:CZZ) in a $192 million proposed deal and urged security holders Monday to tender securities before the Oct. 27 deadline.

@page_break@Jaguar Financial (TSX:JFC) has said it will attempt to block the deal because debt holders would receive only 80% of their principal back, not 101% as required under the debt agreements. Canadian Royalties shares jumped eight¢ or 12.12% to 74¢.