Markets closed lower Tuesday as investors mulled over mixed economic news and a warning from retail giant Costco. The S&P/TSX composite index closed down 29.04 points at 7,189.54.

Strength in the gold sector supported the Toronto market. Gold issues climbed 1.98% aided by a higher bullion price and news that AngloGold and Ashanti Goldfields were merging to create the world’s No. 1 gold company.

Bema Gold rose 10¢ to $2.41, while Iamgold gained 25¢ to $7.15. GoldCorp was up 49¢ to $17.14.

Information technology stocks fell 2.4%.

ATI Technologies dropped $1.57 to close at $16.30 after the graphics chip maker was downgraded by Wedbush Morgan Securities.

Research In Motion dropped $2.94 to close at $35.20 as takeover speculation waned and Scotia Capital cut the company’s rating to because of the sharp jump in the share price.

Financial issues lost 0.74%, with Bank of Nova Scotia shares off 32¢ at $59.35 after sources said Canada’s second largest bank was not a bidder for New Jersey-based Hudson United Bancorp.

Toronto volume was 180 million shares worth about $2.68 billion. Overall the market momentum was negative with decliners outpacing advancers 604 to 516.

The TSX Venture Exchange was down 0.21 point at 1,212.82.

In New York, the Dow Jones industrial average lost 149.72 points to 9,036.32. The Nasdaq declined 40.50 points to 1,673.56, and the S&P 500 lost 17.35 to 965.47.

U.S. markets weakened even as the Institute for Supply Management said its latest index on the U.S. service sector was more positive than expected, rising to 65.1 in July from 60.6 the previous month.

Costco Wholesale helped lead the New York market lower, dropping US$6.95 or 19% to US$30.03 US after cutting its profit estimates for the rest of the year.

The Canadian dollar was off 0.19 cent at US71.28¢. The loonie got some support when Statistics Canada reported a 4.3% jump in building permits during June, far above the expected 1.3% rise.