Stocks are expected to drop early Friday, following the release of a report that showed that U.S. gross domestic product grew slower than economists had expected in the fourth quarter.

U.S. GDP slowed sharply in the fourth quarter, but still showed signs that a recovery was in motion.

GDP rose at a 4% annual rate, about half the unrevised 8.2% rate reported for the third quarter, the Commerce Department said Friday.

Economists, while forecasting the slowdown, had had expected a more robust 4.8% pace for Q4 GDP.

For the full year, U.S. GDP rose 3.1%, well above the 2.2% growth recorded in 2002.

Here at home, Statistics Canada reported that GDP remained essentially unchanged in November, after edging up 0.1% in October and by 1.2% in September, Statistics Canada reported Friday. For the first 11 months of 2003, GDP was up 1.8% over the same period in 2002

Production in the energy sector advanced 1.8%, the strongest month since February 2001, reflecting higher production and exploration of natural gas, StatsCan said.

The transportation sector was up as a result of increased air travel. The housing boom continued into November, reflecting a gain in housing starts for single-family dwellings. In addition, higher output was reported by the health, education and government administration sectors.

In Friday’s earnings news Honda Motor Co. reported surprisingly strong quarterly profit growth, as solid car and motorcycle sales in Asia and North America more than offset a slump in Japan.

Also due to report Friday, the week’s last big gasp of earnings, are ChevronTexaco and U.S. Steel.

After markets closed on Thursday,, Nortel Networks said it earned US$732 million in 2003, its first annual net profit since 1997.
Overnight in Asia, markets were narrowly mixed. Tokyo’s Nikkei average broke a four-day losing streak, edging up 4.17 points to 10,783.61 after a 2.6% loss in the previous four sessions.

In Hong Kong, the Hang Seng index declined 44.64 points, or 0.33%, to 13,289.37.

At midday, European bourses are posting modest gains. The FTSE 100 index is up 0.3% early in the afternoon in London, edging up 13.6 points to 4,425.1. Frankfurt is up 0.3%, and Paris is up 0.5%.

Falling prices for gold and oil drove Toronto stocks lower on Thursday. The S&P/TSX composite index fell 86.35 points to close at 8,449.36

In New York, the Dow Jones industrial average finished 41.92 points higher at 10,510.29. The tech-heavy Nasdaq composite index lost 9.14 points at 2,068.23, while the broader S&P 500 gained 5.64 points at 1,134.11.

The Canadian dollar fell hard for a second consecutive session on Thursday.

The loonie finished a volatile session at US75.19¢, down from US 75.45¢ at Wednesday’s close.