Toronto stocks are looking at a shaky start Thursday, one day after Nortel Networks fired its three top executives over worsening accounting problems and saw its shares plunge $2.18, or 28.76%, to $5.40.

In economic news, U.S. gross domestic product rose at a 4.2% annual rate during the first quarter of 2004, slightly faster than the 4.1% rate during the previous period, but slower than the 5% pace that economists had forecast.

There was better news on the jobs front. The U.S. Labor Department said initial jobless claims declined by a larger-than-expected 18,000 to a seasonally adjusted level of 338,000 in the week that ended April 24. That marked the lowest level in three weeks.

Statistics Canada reported today that manufacturers’ prices were up 0.5% in March following an increase of 1.9% in February. Compared with March 2003, prices fell 1.4%, largely because of the effect of the Canadian dollar against the US dollar, StatsCan said. Meanwhile, prices of raw materials increased 4.5% from February.

StatsCan also released its business conditions survey of manufacturing industries for April. The agency said uncertainty seems to best describe manufacturers’ confidence regarding the outlook for the second quarter of 2004.

Although remaining positive, production prospects for the coming quarter were slightly lower and satisfaction with the current level of unfilled orders was less negative. However, StatsCan said manufacturers indicated more concern with lower levels of new orders and rising levels of finished product inventories.

In this morning’s earnings news, Suncor Energy Inc. said the Canadian dollar’s resurgence against the U.S. greenback ate into the company’s first-quarter profit, which fell to $227 million from $366 million a year earlier.

Energy services company Precision Drilling Corp. reported sharply higher profits and revenues in the first quarter as it benefited from higher exploration and drilling activity in the Canadian oil and gas industry. The Calgary company said it earned $100.5 million or $1.91 a diluted share for the three months ended March 31. That compared with profits of $83.1 million or $1.34 a share for the 2003 quarter.

DaimlerChrysler reported a 33% drop in first-quarter profit Thursday, largely because of restructuring costs at its U.S. Chrysler division and troubles with a truck toll project in Germany. The German-U.S. auto manufacturer reported earnings of 393 million euros (US$465 million) for the first quarter of 2004, compared with 588 million euros a year ago.

Japan’s financial markets were closed for Greenery Day, a national holiday, but stocks plunged across Asia amid worries about higher U.S. interest rates, and a possible economic slowdown in China.

Hong Kong’s Hang Seng Index dropped 159.73 points, or 1.31%, to 12,005.58, after investors dumped big property developers and mainland Chinese companies.

Negative news from Nortel Networks Corp. and slumping commodity prices sent Toronto stocks plunging Wednesday. The S&P/TSX composite index dropped 287.69 points, or 3.37%, to 8,247.33. This was the market worst closing since Dec. 31.

Nortel has fired its three top executives, and is saying that accounting problems – already under investigation – are worse than previously reported. Its shares plunged $2.18, or 28.76%, to $5.40 with 100 million shares changing hands.

Meanwhile, the materials sector shed 4.91% with the mining sub-group down 6.08%, while gold-mining stocks fell 6.5%. Metals stocks took a hit on news that credit controls in China could curb China’s desire for metals.

On Wall Streets, market indices and averages closed lower as concerns over China and Nortel had an adverse impact south of the border. The Dow Jones industrial average fell 135.56 points, or 1.29%, to 10,342.60. The S&P 500 Index dropped 15.70 points, or 1.38%, to 1,122.41, and the tech heavy Nasdaq composite index fell 42.99 points, or 2.12%, to 1,989.54.

The Canadian dollar tumbled more than a cent Wednesday to its worst close since last September, buffeted by a sharp selloff of Nortel shares, concerns about the Chinese economy and the spectre of higher American interest rates. The currency ended the day down 1.31¢ at US72.75¢, its biggest one-day drop since January.