Falling commodity prices greeted Canadian markets as they opened for the first time in 2005, while U.S. investors took profits for the second session in a row Tuesday morning.

At midday, Toronto’s S&P/TSX composite index was down 74.03 points or 0.8% to 9172.62. The resources-heavy TSX Venture Exchange slid 36.79 points or 2.02% to 1788.68. The Dow Jones industrial average, up and down throughout the morning, was down 25.63 points or 0.24% at 10703.80. The Nasdaq composite index lost 27.49 points or 1.28% at 2124.66, while the Standard & Poor’s 500 index was off 5.69 points or 0.47% at 1196.39.

The Canadian dollar was down 1.28cents to US81.59¢. The C$ had gained 1.87¢ last week as the U.S. dollar sold off.

Declines on the Toronto market, which was closed on Monday for the New Year’s holiday, were led by a drop of 3.83% in the gold sector as gold stocks also retreated in the face of a stronger U.S. currency. The price of bullion fell $1.10 to US$427.50 US an ounce in New York.

The TSX mines and metals sub-group lost 2.46% amid worries about a drop in Chinese demand this year. Aluminum and copper prices fell to their lowest levels in three months.

The TSX energy sector-the best-performing group on the TSX last year – shed 1.86%. The price of light sweet crude for February delivery was up eight cents to US$42.20 a barrel on the New York Mercantile Exchange, following a drop of US$1.33 a barrel Monday amid mild U.S. winter weather.

The heavy-weight financials group and real estate were the only two sectors in the black, and just barely.

In New York, investors extended their new year’s profit-taking into a second session Tuesday, keeping stocks mixed despite continued strength in the dollar and new merger activity.

Wall Street was cheered as Rayovac Corp. announced the first major acquisition of 2005, a US$476-million purchase of United Industries Corp., a privately held lawn care and pet supply company. The deal continues a growing trend of merger and acquisition activity since the post-election rally began.

Rayovac gained $4.87 to US$34.43 on the news of its agreement with United Industries, which includes the assumption of $880 million in debt. The move will strengthen Rayovac’s consumer products offerings and allow wider distribution of United Industries’ products, analysts said.

Krispy Kreme Doughnuts Inc. fell as a shareholder lawsuit alleged the troubled doughnut maker frequently padded its sales figures by overshipping doughnuts to its wholesalers, knowing that many would be returned. Krispy Kreme, which said it plans to restate earnings for its past fiscal year, lost $1.91 or 15.5% to US$10.40.

Amazon.com Inc. dropped almost 6% or $2.61 to $41.91 after Smith Barney downgraded the online retailer’s stock to “sell” from “hold,” citing concerns over increasing competition. Analysts at the brokerage said Amazon will have to invest heavily in marketing and new technologies to retain its leadership position in Internet sales.

Meanwhile, the U.S. industrial sector continues to gain traction, according to a new economic report. Factory orders were up 1.2% in November, the Commerce Department said, better than the 1% gain economists had expected.

Overseas, Japan’s Nikkei stock average rose 0.25%. In afternoon trading, Britain’s FTSE 100 was up 0.68%, Germany’s DAX index slipped 0.02%, and France’s CAC-40 was climbed 0.2%.