Money world

The Toronto stock market was slightly lower late Monday morning as big gains in commodity stocks were balanced by losses in the financial sector, while data showed the American economic slowdown put the Canadian economy into reverse at the end of 2007.

New York markets were weak after reports showed further contraction in the American manufacturing sector and sharply lower construction spending.

Toronto's S&P/TSX composite index fell 40.67 points to 13,542.02 with support coming from higher energy and precious and base-metal stocks, despite glum economic data from the United States as investors hope emerging markets will take up the slack from a slowing American economy.

"I think they are looking for other (emerging) markets to pull up their bootstraps and carry on," said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.

"I think most of those investors want to be optimistic. You can see that."

The Canadian dollar dipped 0.47 cent to 101.11 cents US after Statistics Canada reported economic output contracted 0.7 per cent in December because of "significant reductions in manufacturing activities, wholesaling and in oil and gas extraction."

The economy advanced 2.7 per cent for the full year, but fourth-quarter growth slowed dramatically to 0.2 per cent.

The report increased expectations that the Bank of Canada will cut interest rates aggressively Tuesday when its next decision is announced.

"Given the weaker-than-expected Q4 data, a Canadian dollar currently sitting well above the 98 cent US assumption in the latest monetary policy report update, and that U.S. growth will likely be very weak over the first half of the year, we see the Bank of Canada cutting rates by 50 basis points," said RBC economist Rishi Sondhi.

The TSX Venture Exchange ticked 24.49 points higher to 2,806.56.

In New York, the Dow Jones industrial average lost 76.77 points to 12,189.62 following a 315.79-point tumble Friday.

The Nasdaq composite index was down 13.06 points to 2,258.42 while the S&P 500 index edged 5.22 points lower to 1,332.48.

The Institute for Supply Management reported that its February manufacturing index registered at 48.3, the weakest reading in nearly five years. And the Commerce Department said construction spending in January took its biggest nosedive in 14 years, plunging 1.7 per cent.

The TSX gold sector gained three per cent as bullion crept closer to US$1,000 an ounce payday loans. The April bullion contract on the New York Mercantile Exchange was up $11.30 to US$986.30 an ounce after earlier hitting US$992.

Barrick Gold (TSX: ABX) gained $1.40 to $52.60 and Kinross Gold Corp. (TSX: K) improved $1 to $25.35.

Oil prices were also on the rise following comments by a senior Libyan official that the Organization of Petroleum Exporting Countries will hold production levels unchanged this week as it continues to gauge the state of the global economy.

The April crude contract on the Nymex rose $1.66 to US$103.50, taking the TSX energy sector up 0.9 per cent. Suncor Energy (TSX: SU) rose $2.85 to $104.35 and UTS Energy Corp. (TSX: UTS) gained six cents to $5.88.

Shares in Petrolifera Petroleum Ltd. (TSX: PDP) were off 15 cents at $12.35 after the company said it will restate 2006 results to correct tax reporting. It expects earnings for 2006 to be cut by $2.6 million from the previously reported $39.9 million.

Base metals stocks supported the Toronto market with the mining sector ahead three per cent. Teck Cominco Ltd. (TSX: TCK.B) ran ahead $1.79 to $41.06 while HudBay Minerals (TSX: HBM) advanced 85 cents to $19.65.

Worries about the credit crisis and the spectre of another round of big writeoffs linked to U.S. mortgages sent the TSX financial sector down two per cent.

Bank of Montreal (TSX: BMO) fell $1.65 to $48.05 and Royal Bank (TSX: RY) retreated $1.01 to $48.38.

Shares in Rogers Communications Inc. (TSX: RCI.B) were up 40 to $39.25 after ratings agency DBRS placed the ratings for its notes under review with positive implications. It said the move "follows a period of continued growth in the company's wireless and cable operations and a demonstrably more focused approach to financial management . . . "

London's FTSE 100 index declined 49.5 points to 5,834.8.

Frankfurt's DAX 30 lost 73.27 points to 6,674.86 and the Paris CAC 40 gave back 43.72 points to 4,746.94.

Hong Kong's Hang Seng index dropped 3.1 per cent to 23,584.97.

Japan's benchmark Nikkei 225 index plunged 4.5 per cent to close at 12,992.18 and India's benchmark Sensex tumbled 5.3 per cent to 16,639.54.

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