The Canadian Press

The Toronto stock market was likely in for a second day of losses Friday as commodity prices retreated amid worries that the debt crisis in Dubai could derail a global economic recovery.

Investors are reeling from Wednesday’s news that Dubai World, a government investment company, has asked creditors if it can postpone its forthcoming payments on US$60 billion in debt until May. That stoked fears of a potential default and contagion around the global financial system, particularly in emerging markets.

The Canadian dollar continued to pile on losses as investors bought up the U.S. dollar, leaving the loonie down 0.89 of a cent to US93.41¢ on top of Thursday’s 1.35¢ decline.

New York futures pointed to sharp losses at the open as U.S. markets reopen for a shortened session following the American Thanksgiving holiday. The Dow Jones industrial futures tumbled 222 points to 10,220, the Nasdaq futures dropped 47.25 points to 1,747 and the S&P 500 futures fell 28.4 points to 1,080.4

The January crude contract on the New York Mercantile Exchange fell $3.84 from Wednesday’s close to US$74.12 a barrel.

Gold prices also backed off with the December bullion contract on the Nymex down 1,162.80 an ounce.

December copper was down 9¢ to US$3.08 a pound amid fears that losses in the small emirate, which has drawn wealthy tourists from around the globe in the past decade with its Las Vegas-in-the-Middle East appeal, could imperil a nascent economic rebound.

“The real risk to financial markets is that of financial contagion, though what we see now is simply the immediate asset price impact,” said a briefing note from Scotia Capital.

“Should Dubai’s actions spur concerns that other large entities could pursue similar courses, we could see liquidity conditions deteriorate once again and it become difficult for entities to refinance debts. This however is a much more gloomy scenario and it is still too early to be able to attach a high probability to it.”

The latest trouble on markets comes as the U.S. kicks off the unofficial start to the holiday shopping season — coincidentally called Black Friday. Investors will be tracking news from retailers for insights into how much consumers will spend in the coming month. Consumer spending is the biggest driver of the U.S. economy.

Overseas, Asian stocks were particularly badly hit as they played catch-up following the big losses in Europe in the previous session. Hong Kong’s Hang Seng closed down 4.8%, while Japan’s Nikkei 225 stock average fell 3.2% and South Korea’s benchmark plummeted 4.7%.

London’s FTSE 100 drifted 0.11% lower, Frankfurt’s DAX was flat and the Paris CAC 40 was ahead 0.49%.

In corporate news, Mosaid Technologies Inc. (TSX:MSD) said Thursday it earned $5 million or 49¢ per diluted share for the quarter ended Oct. 31 compared with a loss of $3.4 million or 33¢ per diluted share a year ago. Revenue in the quarter totalled $17.3 million, up from $13.8 million.

Thursday wrap: TSX tumbles as investors fretted over debt problems at Dubai World