North American stock markets are pointing to a sluggish start on Friday after the Dow Jones industrial average closed at its lowest level in more than six years on Thursday and Statistics Canada revealed on Friday that the consumer price index fell by more than expected in January.

The decrease in the CPI, 0.3% vs December, marks the fourth straight month that Canadian consumer prices fell. The decline was led by falling costs for natural gas and motor vehicles. The year-over-year inflation rate slowed to 1.1%, the least in two years, from 1.2% in December. Annual inflation peaked at 3.5% in August 2008.

Economists had predicted the monthly inflation rate would fall 0.2%, and the year-on-year pace would be remain at 1.2%.

The news led to a rise in the Canadian dollar to US$79.40 from US$79.24 on Friday morning as expectations that the Bank of Canada would cut the interest rate further next month increased.

Overseas, the news was also gloomy as Asian markets ended the week sharply lower. In Japan, the Nikkei stock average of 225 companies ended down 1.9% at 7,416.38. The more inclusive Topix index ended 1.6% lower at 739.53, breaching its closing low of Oct. 27, 2008.

Australia’s S&P/ASX 200 ended down 1.4%, China’s Shanghai composite index rebounded from early losses to end up 1.5%, Taiwan’s Taiex slid 2% and Hong Kong’s Hang Seng index finished down 2.5%.

India’s sensitive index dipped 2.2%, while Singapore’s Straits Times index gave up 2.1%.

South Korea’s Kospi Composite slumped 3.7% and New Zealand’s NZX-50 fell 1.5%, with both taking losses into a fifth straight session.

European shares also fell sharply. T he pan-European Dow Jones Stoxx 600 index was down 2.8% at 178.23. London’s FTSE 100 ondex was down 2.7% at 3911.06. Frankfurt’s DAX Xetra index declined 3.2% to 4081.96 and Paris’s CAC-40 Index was 3% lower at 2786.40.

On Thursday, the S&P/TSX composite index closed at 8,185.35, up 9.4 points, or 0.1%.

Crude oil for March delivery rose US$4.86, or 14%, to end at US$39.48 a barrel on the New York Mercantile Exchange. The boost followed a surprising report that U.S. oil inventories declined by 200,000 barrels last week.

The S&P/TSX Venture composite index gave up early gains to finish down 13.72 points, or 1.5%, at 902.1.

The main U.S. stock market indices declined on Thursday, weighed down by investor concerns about the ailing banking sector.

The Dow Jones industrial average slipped below 7,500 to its lowest level since October 2002. The blue-chip average shed 89.68 points, or 1.2%, to end at 7,465.95.

The S&P 500 gave up 9.48 points, or 1.2%, to close at 778.94.

The Nasdaq composite index fell 25.15 points, or 1.7%, to end at 1,442.82.