The Canadian Press

The latest in a series of disappointing earnings reports and soft economic data from the United States sent the Toronto stock market sharply lower Friday.

The S&P/TSX composite index fell 119.01 points to 11,685.37. The main index was down 268 points or 2.24% for the week, more than wiping out the sharp gain racked up in the first week of 2010 trading as investors passed judgment on the initial batch of U.S. quarterly earnings reports.

“Earnings you could say, well, the topline is a little weak but the bottom line is OK or vice-versa,” said Paul Taylor, chief investment officer at BMO Harris Private Banking.

“So they’re not unmitigated disasters but the market needs to see some consistency in both economic and earnings data and unfortunately that hasn’t been there this week.”

The Canadian dollar was down 0.57 of a cent to US97.14¢.

The Toronto financial sector pulled back 1.14% after JPMorgan Chase reported that it earned US$3.28 billion or 74¢ a share in the final three months of 2009. The showing easily topped analyst forecasts of 61¢ but total revenue fell below expectations and the company’s stock dropped $1.01 to US$43.68.

“Even though actual earnings rose fourfold from a year earlier, investors are not happy with the fact that the retail bank operation still reported a loss for the quarter and boosted its loan loss reserves,” said Andrew Pyle, investment advisor at ScotiaMcLeod in Peterborough, Ont.

Royal Bank (TSX:RY) stepped back 94¢ to $54.81 and TD Bank (TSX:TD) fell 99¢ to $63.35.

Intel Corp. shares lost 68¢ to US$20.80 even as the number one maker of computer microprocessors turned in a profit of US$2.3 billion or 40¢ a share, much higher than the 30¢ a share that analysts had forecast. It also beat revenue forecasts and the company delivered a bright profit outlook for 2010.

Investors were also disappointed with the earnings report from aluminum giant Alcoa earlier in the week.

The gold sector was the weakest percentage decliner on the TSX, down 1.93% as the February bullion contract on the Nymex moved down $12.50 to US$1,130.50 an ounce. Barrick Gold (TSX:ABX) dropped 86¢ to $40.52.

Shares in Kinross Gold Corp. (TSX:K) were down 99¢ to $19.75 after the company said it expects to produce about 2.2 million gold equivalent ounces in 2010, consistent with its 2009 production.

Novus Gold Corp. (TSXV:NOV.H) and Terra Ventures Inc. (TSXV:TAS), two junior mineral exploration companies, say they’ve made a new gold discovery on the REN property in Northwest Territories. Novus shares were up a penny at 46¢ while Terra shares gained 2.5¢ to 49.5¢ on the TSX Venture Exchange.

The TSX energy sector was down 1.02% as oil prices moved back for a fifth session with the February crude contract on the New York Mercantile Exchange $1.39 lower at US$78 a barrel. Suncor Inc. (TSX:SU) lost 81¢ to $36.71 and Canadian Natural Resources (TSX:CNQ) fell 81¢ to $71.99.

The base metals sector moved 0.91% lower as March copper was off 2¢ at US$3.36. Sherritt International (TSX:S) lost 10¢ to $7.09 and Teck Resources (TSX:TCK.B) stepped back 72¢ to $40.80.

Taseko Mines Ltd. shares (TSX:TKO) soared 71¢ or 15.92% to $5.17 after it received a key approval for its long-delayed Prosperity gold and copper project in the B.C. Interior. Its stock price earlier hit $5.28, its highest in level more than a year.

The TSX Venture Exchange declined 1.98 points to 1,593.31.

There was little in a raft of U.S. economic data to encourage investors.

The Labour Department says the consumer price index rose a modest 0.1%, bringing inflation for all of 2009 to a mild 2.7%.

However, another report showed inflation-adjusted weekly wages for the 12 months ended in December were down 1.6%, the biggest decline since 1990. Slack wages and scarce job creation have slowed consumer spending, hindering the economy’s ability to mount a strong recovery.

Meanwhile, industrial production rose 0.6% in December as unusually cold weather helped energy utilities offset a small drop in manufacturing. It was the sixth straight monthly gain and beat expectations for a 0.5% gain. The mixed picture shows that economic recovery remains uncertain, as consumers and businesses did not spend enough to spur the production of more factory goods.

And U.S. consumer sentiment inched higher in early January _ but not as much as expected. The Reuters/University of Michigan index rose to 72.8 from 72.5 in December, which was smaller than the 75 reading that had been expected.

@page_break@The Dow Jones industrial average stepped back 100.9 points to 10,609.65, the Nasdaq composite index dropped 28.75 points to 2,287.99 and the S&P 500 lost 12.43 points to 1,136.03.

New York markets are closed Monday for the Martin Luther King Jr. holiday.

In other corporate news, American fertilizer company CF Industries Holdings Inc. (NYSE:CF) is dropping its hostile pursuit of U.S. rival Terra Industries Inc. (NYSE:TRA). The move clears a key obstacle for Calgary-based Agrium Inc. (TSX:AGU), which has had its sights set on CF since last February, but has seen all of its overtures rebuffed. Agrium’s more than US$5.4-billion offer for CF was made on the condition CF abandon its efforts to take over Terra.

Agrium shares were down $2.99 to $63.91.