Thursday wrap: Stocks buckle on European debt worries, lower confidence about U.S. jobs growth

The Canadian Press

The Toronto stock market tumbled Thursday as worries about Europe’s government debt crisis unnerved investors and sent the U.S. dollar higher, which in turn punished commodity prices.

Adding to the session’s woes was disappointing employment data a day before the U.S. releases its non-farm payrolls report for January.

The S&P/TSX composite index fell 261.7 points to 11,128.76, its biggest one-day slide since early October, 2009. The TSX Venture Exchange moved 61.8 points lower to 1,452.18.

The Canadian dollar was down 0.91 of a cent to US93.22¢.

March copper was 9¢ lower at US$2.88 a pound and the base metals sector fell 6%. Teck Resources (TSX:TCK.B) was down $2.97 to C$33.89 while Ivanhoe Mines (TSX:IVN) fell back $1.88 to $13.74.

The energy sector fell 2.44% as the March crude contract on the New York Mercantile Exchange dropped $3.84 to US$73.14 a barrel. Suncor Energy (TSX:SU) fell 97¢ to C$31.71 and Canadian Natural Resources (TSX:CNQ) lost $1.75 to $70.10.

The April bullion contract was down $50.30 to US$1,061.70 an ounce, taking the gold sector down 4.72%. Barrick Gold Corp. (TSX:ABX) faded $1.60 to C$36.45 and Goldcorp Inc. (TSX:G) stepped back $1.69 to $35.58.

Financials were also a major drag, down 1.63% as Scotiabank (TSX:BNS) gave back 84¢ to $44.84 while Manulife Financial was down 62¢ to $19.44.

The tech sector managed a slight gain in the wake of a solid earnings report from Cisco Systems after the close Wednesday. Open Text Corp. (TSX:OTC) shares jumped $3.95 or 9.18% to C$46.98 after the company reported Wednesday a second-quarter profit of US$21.2 million, up sharply from a year ago and boosted by strong revenue growth. But elsewhere in the sector, Research In Motion Ltd. (TSX:RIM) shed $1.04 to $70.96.

Debt-laden European countries, particularly in Greece, Spain and Portugal, have increasingly been in focus this week amid concerns that leaders in Athens and Lisbon would not be able to push through unpopular austerity programs to tame their ballooning deficits.

On Wednesday, the European Commission gave its cautious backing to the Greek government’s plan to slash its budget deficit, but the markets remain unconvinced that Greece can pull it off.

“In many of these countries, what you tend to get is strikes and other things that worsen an already bad situation,” said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

“So the concern is . . . that Greece has agreed to spending cuts that . . . (are) not being well-received by the population.”

Greece on Thursday faced a first wave of strikes, with customs and tax officials walking off the job for 48 hours.

Portugal’s minority Socialist government is facing potential defeat against opposition parties which want to hike spending in some areas, and who could outvote the government in Friday’s parliamentary session.

Meanwhile, investors have been expecting that Friday’s U.S. jobs data will show the economy added 20,000 jobs in January. But that hope took a knock Thursday after the number of newly laid-off workers in the U.S. filing initial claims for jobless benefits rose unexpectedly last week by 8,000 to 480,000. Economists had expected a drop to 460,000, according to Thomson Reuters.

New York markets also sold off despite other data showing that orders to U.S. factories rose by 1%, far exceeding expectations.

New York’s Dow Jones industrials dropped 268.37 points to 10,002.18 _ after briefly falling below 10,000 for the first time since Nov. 6 _ the Nasdaq composite index lost 65.48 points to 2,125.43 and the S&P 500 index shed 34.17 points to 1,063.11.

In other 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 it turn a $350-million profit and increase quarterly revenues by 3.9% to $4.65 billion. That was a sharp reversal from a $48-million loss for the same period last year. BCE shares gained 69¢ to $28.31.

Canaccord Financial Inc. (TSX:CF) shares dipped 24¢ to $9.56 even though it reported revenue in the last three months of 2009 nearly doubled compared with a year earlier, reaching $173.2 million. The Vancouver-based securities broker said 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.

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