The Canadian Press

The Toronto stock market headed for a lower open Tuesday as U.S. aluminum giant Alcoa Inc. delivered a disappointing start to the fourth quarter earnings season, and China announced measures to cool its economy.

The Canadian dollar inched 0.01 of a cent lower to US96.75¢.

U.S. futures pointed towards a negative start to the session with the Dow Jones industrial futures down 66 points to 10,538, while the Nasdaq futures lost 11.5 points to 1,872 and the S&P 500 futures were down 7.4 points to 1,135.1.

After the market closed Monday, Alcoa said it earned 1¢ a share excluding one-time items and special charges. Analysts polled by Thomson Reuters, on average, forecast earnings of 6¢ per share.

Alcoa’s revenue also fell as higher metal prices were offset by ongoing weakness in aerospace, construction and gas turbines businesses.

Investors will keep a close eye on revenues over the next few weeks, as companies report earnings, looking for any signs that customers are returning to the marketplace. Upbeat earnings in recent quarters have often been tied to cost cutting and not revenue growth.

Commodity prices fell after the People’s Bank of China increased the interest rate on its one-year bill by eight basis points to 1.84%.

The rise was the second undertaken in the interbank markets in a week and provided a further hint that more substantial interest rate increases could be in the offing as Chinese economic growth accelerates.

With plenty of money sloshing around, soaring real estate prices in Beijing, Shanghai and other major cities have reawakened fears that asset bubbles and inflation could set the economy spinning.

China also raised the ratio of reserves banks must hold by 0.5 percentage points, reflecting concerns over a possible rise in inflation this year as the country’s economy rebounds.

“The PBoC are sensibly taking early steps to avoid overheating in the property market but the Chinese economy should continue to perform well during 2010,” said Neil Mackinnon, global macro strategist at VTB Capital.

Energy stocks will likely be pressured as the February crude contract on the New York Mercantile Exchange fell $1.11 to US$81.41 a barrel.

The February bullion contract on the Nymex declined $2.40 to US$1,149 while March copper was down 5¢ to US$3.39 a pound.

Overseas, Hong Kong Hang’s Seng dropped 0.4% and Japan’s Nikkei 225 stock average, which was closed for a public holiday on Monday, ended 0.8% higher.

London’s FTSE 100 index slid 1.19%, Frankfurt’s DAX was down 1.22% while the Paris CAC 40 lost 1.15%.

In other corporate news, Cadbury PLC stepped up its defence against a hostile takeover bid from Kraft Foods Inc. by saying that both its full-year revenue growth and profit margins will beat market expectations. The British chocolate and gum maker, which is fighting to remain independent, argued that the share portion of Kraft’s US$16.5 billion bid is unappealing because of the U.S. company’s “poor track record of delivery.”