Thursday outlook: Stocks in for lower opening ahead of U.S. jobs data, worries about sovereign debt

The Canadian Press

The Toronto stock market headed for a lower open Thursday with investors cautious ahead of Friday’s key U.S. non-farm payrolls report.

Buying sentiment could also be limited by spreading worry about debt-plagued governments in Europe.

The Canadian dollar was up 0.04 of a cent to US94.17¢.

U.S. futures pointed to a negative open with the Dow Jones industrials down 53 points to 10,188, the Nasdaq futures fell 6.5 points to 1,779 while the S&P 500 futures were off 5.9 points to 1,090.5.

The TSX could also be pressured by lower commodity prices as the March crude contract on the New York Mercantile Exchange dropped 63¢ to US$76.35 a barrel.

The April bullion contract was down $8.80 to US$1,102.60 an ounce while March copper was unchanged at US$2.97 a pound.

Investors are hoping to see that Friday’s U.S. jobs data will show the economy added 20,000 jobs during January, with an increase in the jobless rate to 10.1% from 10%.

Stocks rallied early this week on fresh signs surging economic growth at the end of last year was carrying forward into 2010. However, markets fell modestly Wednesday after a report showed the service sector did not expand as fast as expected last month.

Concerns over debt-laden European countries, particularly in Greece, Spain and Portugal, have grown this week.

On Wednesday, the European Commission gave its cautious backing to the Greek government’s plan to slash the budget deficit from around 13% of economic output in 2009 to below 3% in 2012.

Despite the Commission’s cautious backing, the markets remain unconvinced that Greece can pull it off and are increasingly coming round to the view that Portugal and Spain, in particular, will face mounting difficulties dealing with their own budgetary difficulties. On Wednesday, Portugal cut a planned treasury bill issue and Spain said its deficits will be more than anticipated over the coming three years.

“It would appear the sovereign debt problem is turning into a contagion in the eurozone,” said Michael Hewson, an analyst at CMC Markets.

Meanwhile, the European Central Bank has left its benchmark interest unchanged at 1%.

The Bank of England also announced it is keeping its main interest rate unchanged at the record low of 0.5% and said it will not be asking the government for the authority to pump more newly created money into the barely recovering British economy.

Sovereign debt issues pushed London’s FTSE 100 index down 0.72%, Frankfurt’s DAX declined 0.53% while the Paris CAC 40 lost 0.66%.

In Asia, Japan’s Nikkei 225 stock average fell 0.5 per cent with Toyota continuing to drag on the market as the world’s largest automaker grappled with a global recall.

It closed down 3.5 per cent before announcing after the bell it returned to profit last quarter and had raised its annual earnings forecast. The results, however, didn’t reflect damage from the massive recalls linked to faulty gas pedals

In New York, Toyota shares dropped six per cent Wednesday and were down a further 1.25 per cent in pre-market trading.

Elsewhere, Hong Kong’s Hang Seng tumbled 1.8 per cent.

In earnings news, telecom giant BCE Inc. (TSX:BCE) said its acquisition of The Source electronics stores and the remaining half of Virgin Mobile Canada helped increase its overall revenues in the fourth-quarter by 3.9 per cent to $4.65 billion. BCE’s net earnings came in at $350-million, or 46¢ a share, a sharp reversal from a $48 million dollar loss for the same period last year.

Canaccord Financial Inc. (TSX:CF) says its revenue in the last three months of 2009 nearly doubled compared with a year earlier, reaching $173.2 million .The Vancouver-based securities broker also says net income was $15.1 million or 27¢ per share, compared with a loss of $1.27 per share or $62.4-million a year earlier when Canaccord recorded substantial one-time charges.

Its quarterly financial report didn’t comment on a news report that said Canaccord has been in talks to acquire Toronto-based Genuity Capital Markets.