The Canadian Press

The Toronto stock market headed for a lower open Friday as investors worry that the days of interest rates near zero are coming to an end.

The U.S. Federal Reserve announced after markets closed Thursday that it will bump up the “discount” lending rate by one-quarter point to 0.75% effective Friday. The discount rate is used for emergency loans to banks.

U.S. futures also pointed to a lower open even as the Fed said the step should not be seen as a signal that it will soon boost interest rates for consumers and businesses.

“Our take is the Fed couldn’t have been any clearer when it said that the move doesn’t reflect a change in the economic or policy outlooks,” said BMO Capital Markets senior economist Sal Guatieri.

“In fact, it’s not clear why equities would weaken on the discount rate move, since it signals that the Fed believes the banking system and credit markets are no longer dependent on emergency liquidity support.”

The Dow Jones industrial futures fell 40 points to 10,335, the Nasdaq futures dropped 5.75 points to 1,815 and the S&P 500 futures moved down six points to 1,099.6.

The U.S. dollar also higher following the Fed announcement, which doesn’t change consumer borrowing rates, sending the Canadian dollar down 0.9 of a cent to US95.12¢.

Commodities also declined as the greenback strengthened, with the March crude contract on the New York Mercantile Exchange down 68¢ to US$78.38 a barrel.

The April gold contract on the Nymex declined $7.20 to US$1,111.50 an ounce while March copper lost 2¢ to US$3.26 a pound.

Growing optimism about the strength of the U.S. economy and rising commodity prices had helped send North American stock indexes sharply higher this week. As of Thursday’s close, the TSX was up about 5%over seven, straight positive sessions.

But the surprise Fed announcement after trading closed left traders wondering whether the so-called “exit strategy” from a loose monetary policy could come faster than expected and stifle consumer demand.

“It begs the questions of why this was not done, or at least signalled at a regular Federal Open Market Committee meeting,” said Marc Ostwald, strategist at Monument Securities in London.

On the economic front, the U.S. Labour Department releases its consumer price report before the open.

Economists surveyed by Thomson Reuters expect the CPI, which measures inflation at the consumer level, rose 0.3% in January, faster than December’s 0.1% increase. They believe that core inflation, which excludes energy and food, will show a more moderate 0.1% increase in January, the same increase as December.

A jump in inflation could put the Fed in a position of having to raise interest rates to fight the rising prices.

Overseas, Hong Kong’s Hang Seng stock index shed 2.6% while Japan’s Nikkei 225 stock average dropped 2.1%.

London’s FTSE 100 index dipped 0.07%, Frankfurt’s DAX was off 0.12% while the Paris CAC 40 gained 0.23%.

In corporate news, Fairfax Financial Holdings Limited (TSX:FFH) has agreed to issue 563,381 subordinate voting shares to a number of institutional investors at US$355 per share for a total of about US$200 million. The funds will be used for the proposed takeover of Zenith National Insurance Corp., announced Thursday.

The Canpotex marketing agency that represents three of Saskatchewan’s major potash producers has reached a contract to sell about US$222 million worth of the fertilizer ingredient to a consortium of buyers in India.

Canpotex said the contract with the Indian group calls for the buyers to pay US$370 per metric ton in the second quarter for about 600,000 tonnes of potash, one of the three major fertilizer ingredients used to promote crop growth.

Canpotex is the international marketing organization owned by Potash Corporation of Saskatchewan (TSX:POT), Calgary-based Agrium Inc. (TSX:AGU) and a Canadian subsidiary of Mosaic Co. (NYSE: MOS).

Two of the potash mining giants will likely face off against each other in court. PotashCorp has launched a lawsuit against Mosaic Potash Esterhazy Ltd. At issue are the potash reserves that PotashCorp. has at the mine in Esterhazy in southeastern Saskatchewan. Mosaic has mined and processed the raw potash ore and sent it to Potash Corp. since an agreement was reached in 1971.

Brookfield Asset Management Inc. (TSX:BAM.A) reports it had a smaller profit in the fourth quarter and year ended Dec. 31. Net income fell to US$102 million or 15¢ per diluted share in the fourth quarter, down from US$171 million or 27¢ per share a year earlier. Annual income fell to US$454 million or 71¢ per share in 2009, down from US$649 million or $1.02 per share in 2008.

@page_break@Birchcliff Energy Ltd. (TSX:BIR) is increasing its capital budget to $182 million in 2010, up 78% from last year. The company also said its unaudited 2009 financial results include a net loss of $24.2-million or 20¢ per diluted share. That contrasts with an annual profit of $29.898 million or 26¢ per share. Revenue before deducting royalties fell to $150.7 million from $248.4 million. The company didn’t disclose its quarterly results.