Disappointing trade figures on both sides of the border cast a pall over the markets as investors bailed out of equities amid worries about how strong their respective country’s economies were.

In Toronto, the TSX/S&P composite fell 164.89 points or 1.88% to 8585.42 on volume of almost 292 million shares, while the TSX Venture Exchange was off 28.95 or 1.5% to 1895.95 on volume of 74.6 million shares traded. Decliners lead advances 902 to 406, with the metals and mining subindex off 4.6%, the material subinbex down 3.7% and gold subindex off 3.5%. The financials subindex fell 1.17%.

On Wall Street, the Dow Jones industrial average closed down 160.00 points or 1.53% at 10296.96. The Standard & Poor’s 500 Index ended down 16.66 points (1.46%) at 1123.92. The technology-laced Nasdaq Composite Index fell 31.01 points (1.55%) at 1964.15.

Canadian investors seemed spooked by January Canadian merchandise trade figures that fell, thanks mainly to weakness in the automotive sector, to $5.2 billion from $5.4 billion in December. Exports totaled $31.8 billion, down 4.7% from December. Imports dropped to $26.6 billion, down 5%.

Statistics Canada noted that exports have declined in seven of the last 10 months, and the 4.7% drop from December was the largest in nine months. The agency said there were widespread decreases in both exports and imports with all of Canada’s principal trading areas in January, “a total reversal from December.” The January surplus with the United States, Canada’s main trading partner, was $7.3 billion, down from $7.6 billion a month earlier. Exports fell 4% to $26 billion and imports dropped 4.2% to $18.7 billion.

But economists said the trade number hide a much uglier trade picture and they predicted more cuts to interest rates cut are likely, as a result. “There is no sense in beating around the bush — today’s merchandise trade report was quite simply dreadful,” offers TD Bank. “Any beauty in Canada’s January trade surplus was only skin deep, as what was inside looked downright ugly,” said CIBC World Markets.

In the U.S., the picture was also grim. The trade deficit jumped to a new high in January as near-record imports and a slight dip in exports gave Democrats more ammunition to attack the Bush administration for overseas jobs losses. The monthly trade gap widened to record $43.1 billion despite the weaker U.S. dollar, which has been expected to make U.S. exports more competitive overseas.


In business news, Laurentian Bank shares fell 4¢ to $28.70 on news it plans to take its B2B Trust subsidiary private in a $52-million deal. The bank is offering $9.50 a share for the shares it doesn’t already own. That represents a 21% premium to the $7.85 B2B shares closed at on Tuesday. TD Securities, the financial advisor retained by an independent committee of the Laurentian board, says the offer is fair. It says B2B Trust was worth between $8.60 and $9.84 a share.

Laurentian currently owns 77.3% of the shares of B2B Trust.
The trust company was formed in 1991 following the merger of Sun Life Trust and Counsel Trust. It was acquired by Laurentian in 2000.

In Washington, the Securities and Exchange Commission said Wednesday it was considering alternatives to its plan to bar mutual funds from accepting orders after the market close for trades at that day’s price.
Paul Roye, director of the SEC’s investment management division, told a Senate hearing that the commission had received over 800 comments on its proposed hard 4 p.m. rule aimed at ending illegal late trading in mutual funds.

The US$ was up a handful of foreign currencies Wednesday, sending the euro down to US$1.2241 from 1.2402 on Tuesday, while the British pound suffered its biggest one-day drop against the greenback in seven years in the wake of weak British economic data. The Canadian dollar rose 0.04¢ to US75.58¢.