Source: The Canadian Press

The Toronto stock market looked set for a lower open as relief over a US$1 trillion plan to contain Europe’s debt crisis faded.

The TSX in particular could feel the effect from lower commodity prices as the U.S. dollar gained strength against other currencies, particularly the euro.

U.S. futures pointed to a sharply lower open, with the Dow Jones industrial futures 82 points lower to 10,659, the Nasdaq futures down 22.25 points to 1,917.25, and the S&P 500 futures down 10.8 points to 1,145.8.

The Canadian dollar was down 0.15 of a cent to 97.48 cents US while the euro was trading at US$1.2679 after trading as high as US$1.30 on Monday.

The June crude contract on the New York Mercantile Exchange gave back $1.06 to US$75.74 a barrel while the July copper contract on the Nymex lost nine cents to US$3.13 a pound.

However, gold looked attractive to nervous investors and the June bullion contract in New York rose $17.50 to US$1,218.30 an ounce.

Stock markets had risen sharply Monday after the European Union unveiled its massive financial support package to defend the euro and prevent the debt crisis that started in Greece from spreading to other big debtor countries like Portugal and Spain.

But a day later, investors realize that these heavily indebted countries face huge challenges and still have to significantly scale back spending and programs. That means any European economic recovery could be slow and still drag down a global rebound.

“Progress has been made, but the whole sovereign debt looks very like a can of worms,” said David Buik, markets analyst at BGC Partners.

Also having a depressing effect on markets Tuesday was a report which showed inflation in China accelerated last month. Continued high inflation might force the Chinese government to further clamp down on credit to prevent speculative bubbles. The country in recent months has forced banks to increase their reserves in an effort to slow a surging real estate market. China might eventually be forced to raise interest rates to fight inflation, which could slow the economy and imports.

Such a scenario was particularly bad news for the TSX, which is heavily weighed in resource stocks which have benefited from the strong Chinese economy.

Earlier in Asia, stocks gave up much of their previous day’s advance.

Japan’s Nikkei 225 stock average fell 1.1% while Hong Kong’s Hang Seng index retreated 1.4%.

London’s FTSE 100 index dropped 1.72%, Frankfurt’s DAX was ahead 4.11% while the Paris CAC 40 was down 2%.

In corporate news, Toyota cruised back to profit in the latest quarter, handing in a profit of US$1.2 billion, compared with a US$8.27 billion loss the year before. Toyota is forecasting even better results for the fiscal year through March 2011, projecting annual profit to rise 48% to US$3.3 billion.

Whether the world’s biggest automaker can continue its recovery rests in part on salvaging its reputation after recalling more than eight million cars worldwide for faulty gas pedals, a braking software glitch, faulty floor mats and other defects.

In Canada, Boralex Inc.’s (TSX:BLXC) net income fell to $1.3 million in the first quarter as the higher Canadian dollar and lower electricity prices in the United States combined to erode the independent power producer’s revenue. Boralex’s revenue fell to $51 million from $57.2 million in the first three months of 2009, when Boralex had net income of $7.2 million.

First Quantum Minerals Ltd., (TSX:FM), which keeps its books in U.S. dollars, said Monday it earned US$146.2 million or $1.81 per share for the quarter ended March 31 compared with a profit of $10.9 million or 16 cents per share a year ago. Revenue totalled $562.8 million, up from $261 million.

Pan American Silver Corp. (TSX:PAA) more than doubled its quarterly profit compared with a year ago as revenue grew nearly 90 per cent. The silver miner, which keeps its books in U.S. dollars, said Monday that it earned US$19.1 million or 18 cents per share for the quarter ended March 31 compared with a profit of $6.6 million or eight cents per share a year ago.

Canfor Corp. (TSX:CFP) said Monday it will restart operations at its sawmill in Quesnel, B.C., in June because of demand from China. The lumber producer said it will recall approximately 155 employees.