Source: The Canadian Press

The Toronto stock market was in for a sharply lower session Friday as investors end third quarter trading pessimistic about the pace of economic recovery and the outcome of the European debt crisis.

The Canadian dollar was lower as a stronger U.S. dollar pressured commodity prices, down 0.82 of a cent to 95.65 cents US.

U.S. futures also signalled losses at the open as the Dow Jones industrial futures lost 111 points to 10,988, the Nasdaq futures fell 18.8 points to 2,170.8 while the S&P 500 futures dropped 12.7 points to 1,143.6.

Negative sentiment over recovery prospects and doubt that Greece can avoid a default have made for a tough July-September quarter with the TSX down about 12.1% while the Dow industrial average has fallen about 11.2%.

Investors worry that the global economy is slipping into recession, which would lower demand for oil, copper and other commodities which Canada produces. That would weaken exports and profits and further depress share prices on the resource heavy TSX.

Those worries were underscored Friday by Scotiabank’s Commodity Price Index, which fell by 3.3% month over month in August.

Patricia Mohr, Vice-President, Economics and Commodity Market Specialist at Scotiabank, noted that prices “fell amid Euro-zone debt challenges and the political gridlock in the United States, which threatened to undermine steps to bolster the economy.”

But she also noted that “China’s economy — of vital importance to global commodity markets — also appears to be slowing, leading to some unwinding of commodity positions by financial institutions.”

The European debt crisis has weighed heavily on markets recently over fears that Greece is on the brink of a default. That could send shock waves through the global economy, particularly in Europe, and wreak havoc on the continent’s banking sector.

Stock markets closed higher Thursday after German lawmakers approved new powers to fortify a fund aimed at helping countries that use the euro common currency to deal with heavy debt loads. But passage was expected and the boost to sentiment short-lived.

A stronger U.S. dollar helped push crude lower with the November contract on the New York Mercantile Exchange down 81 cents to US$81.33 a barrel. Crude prices have tumbled almost 15% in the past three months.

Copper prices continued to retreat, down another two cents to US$3.23 a pound after closing Thursday at its lowest level since August, 2010. Copper is widely considered a proxy for the overall economy but sliding demand prospects have slashed prices by 24% during the third quarter.

Gold prices were higher with the December contract in New York ahead $4.20 to US$1,621.50 an ounce. Gold is still up about 0.75% for the quarter but is down from the record price for bullion of US$1,876.90 that was racked up in early September.

In Asia, Japan’s Nikkei 225 was fractionally lower, South Korea’s Kospi marginally higher, Australia’s S&P/ASX 200 gained less than 0.1%. Shares in Hong Kong, Shanghai and Shenzhen sank after data showed China’s manufacturing continued to stagnate in September.

Hong Kong’s Hang Seng slumped 2.3%. Mainland’s Shanghai Composite Index fell 0.3% and the smaller Shenzhen Composite Index lost 0.2%.

European bourses were negative with London’s FTSE 100 index up 1.51%, Frankfurt’s DAX lost 2.8% and the Paris CAC 40 declined 1.88%.

In corporate news, Montreal-based copper producer Anvil Mining Ltd. (TSX:AVM) on Thursday received a $1.3-billion friendly takeover offer from Minmetals Resources, part of a vast China-based mining group that’s been on the hunt for base metal producers.