Source: The Canadian Press

The Toronto market looked set for a flat open Monday morning as investors tread carefully amid worries about the health of Europe’s economy.

U.S. futures pointed to a weak start to the session as the Dow Jones industrial futures moved down 10 points to 10,599, the Nasdaq futures were ahead 5.5 points to 1,915.25 and the S&P 500 futures slipped 0.3 of a point to 1,139.

The U.S. dollar was higher as investors moved into the save haven status of the greenback, which in turn pushed the euro to a four-year low of US$1.2233. It later recovered to US$1.2347.

The Canadian dollar also lost ground, losing 0.33 of a cent to 96.6 cents US.

Oil prices were higher after the stronger U.S. currency and signs of rising supplies pushed crude down almost 5% last week. Oil, which is priced in dollars, becomes more expensive to investors holding other currencies when the greenback advances.

The June contract on the New York Mercantile Exchange added 22 cents to US$71.83 after earlier falling below US$70 a barrel.

Investors are grappling with whether severe budget cuts in countries like Greece, Spain and Portugal will drag Europe into a recession.

The austerity measures are being implemented as part of a nearly US$1 trillion bailout program the European Union and International Monetary Fund agreed to last week. The rescue package provides European countries facing mounting debt problems access to cheap loans.

The slide in the currency comes as Europe’s leaders are saying that the loan backstop isn’t enough and that governments must take drastic steps to get debt under control — and shore up the fundamental rules that govern their 11-year-old currency.

German Chancellor Angela Merkel conceded over the weekend that the package was no more than a band-aid solution to the problems afflicting a number of eurozone countries.

Asian stock markets tumbled Monday on investor concern that cost-cutting fiscal measures being taken by Greece, Portugal and Spain could hamper a recovery in the eurozone economy and undermine export demand.

Japan’s benchmark Nikkei 225 stock average dropped 2.2% while China’s benchmark index in Shanghai tumbled 5.1% to a one-year low amid investor concern the government will further tighten credit markets to slow economic growth.

Hong Kong’s Hang Seng index lost 2.1%.

However, European bourses moved higher with London’s FTSE 100 ahead 1.08%, the Frankfurt DAX gained 1.36% while the Paris CAC 40 was up 0.45%.

In corporate news, TD Bank Financial Group Inc. (TSX:TD) said it is expanding its presence in the U.S. Southeast by buying South Financial Group, Inc. (Nasdaq:TSFG) for a total of US$191.6 million. Most of the money would go to the U.S. Treasury, with only US$61 million for shareholders of South Financial.

South Financial has incurred more than US$1.3 billion in losses since the beginning of 2008, primarily as a result of loan charges associated with real estate loans and mortgages. TD would pay US$130.6 million to U.S. government.

American home improvement retailer Lowe’s Cos. reported that its first-quarter net income rose 2.7% to US$489 million. Revenue rose 4.7% to US$12.39 billion.

Magellan Aerospace Corp. (TSX:MAL) said its net income fell to $3.1 million or six cents per diluted share (15 cents basic) in the latest quarter. The profit was down 60% from $7.9 million a year earlier. Revenue slipped 1% to $177.9 million.

On Friday, Ivanhoe Mines (TSX:IVN) reported its first-quarter loss more than tripled to $193.9 million compared with a year ago as the company more than doubled exploration spending and recorded a big one-time charge. That loss amounted to 45 cents per diluted share for the quarter, compared with a loss of $56 million, or 15 cents per share in the year-earlier period.