Canadian stock markets drifted lower Thursday amid a plunge in Japanese markets and data that showed a contraction in Chinese manufacturing.
The S&P/TSX composite index was negative 76.26 points, off its lows of the morning, to pause for lunch at 12,676.24
The Canadian dollar regained 0.55 cents to 97 cents U.S.
Japan's Nikkei index fell 7.3% to 14,483.93 -- its largest slide since Japan was hit by a devastating tsunami more than two years ago, that was also partly blamed on a spike in Japanese government bond yields.
Weaker-than-expected Chinese manufacturing data also resulted in concerns in the markets over future commodities outlook.
HSBC said its preliminary Purchasing Managers Index fell to a seven-month low of 49.6 in May from April's 50.4. Numbers below 50 indicate that activity is contracting. Analysts had expected a more modest decline to 50.3.
In corporate news, earnings season for Canada's major banks was kicked off Thursday with TD Bank Group.
The bank reported before markets opened that it had a "solid" second quarter, with growth in most of its major sectors, but came up short of analyst estimates.
Its net income was up 2% from a year ago $1.723 billion or $1.78 per share while its adjusted earnings were $1.8 billion, or $1.90 per common share.
While the adjusted earnings were up 6% from a year ago, they were just short of a consensus estimate of $1.91 per share compiled by Thomson Reuters. Net income, which is less closely watched by analysts, also missed. The bank's shares dropped 1.2%, or $1.04, to $83.
The gold sector was one of only two gainers among the TSX subgroups, as Kirkland Lake Gold spiked 5.5% to $4.45, and Kinross Gold jumped 2.5% to $6.06.
Metals stocks took the brunt of the negative readings Thursday morning, Teck Resources taking the worst beating, 3.7%, to $28.36.
On the economic slate this morning, Statistics Canada reported that those of us on employment insurance decreased 5,200, or 1%, in March to 523,700. It was the fifth straight drop. StatsCan also says compared with a year earlier, the number of beneficiaries was down 8.1%.
ON BAYSTREET
The TSX Venture Exchange dropped 7.09 points to 934.99
All but two of the 14 Toronto subgroups remained in the red at noon, weighed by metals and mining, tumbling 2.7%, global base metals, down 2%, and industrials, off 1.1%.
The lone holdouts against the tide were gold, brightening 0.6%, and information technology, inching up 0.03%.
ON WALLSTREET
U.S. stocks bucked a global market rout Thursday, as investors try to decipher the latest signals from the Federal Reserve.
The Dow Jones Industrials found its way into the green by 17.13 points to reach noon ET at 15,324.30. The big board had been down as much as 100 points during the morning.
The biggest standout was Dow component Hewlett-Packard. Shares of the PC maker rallied 14%, a day after the company's earnings beat estimates and CEO Meg Whitman said she was "encouraged" by the turnaround plan.
The S&P 500 index was down 4.96 points to 1,650.39. The tech-rich NASDAQ Composite, though still negative, had pulled to within 0.87 points of breakeven to 3,462.43
Fed Chairman Ben Bernanke told lawmakers early Wednesday that withdrawing the Fed's stimulus measures prematurely could derail the economic recovery, though he hinted that the central bank could slow the pace of its bond buying later this year if the economy improves.
Shares of Ralph Lauren slumped after the retailer failed to meet lowered revenue forecasts, even as earnings jumped 35%.
Meanwhile, discount retailer Dollar Tree reported better than expected earnings, sending shares up nearly 5%.
Gap and Sears Holdings are up after the bell.
Shares of Tesla nudged higher, a day after the electric car maker announced that it had repaid a $465-million U.S. loan from the government nearly a decade before it was scheduled to do so
Economically speaking, data showed that U.S. weekly jobless claims dropped by 23,000 to 340,000 in the week ended May 18, keeping the level of initial claims in a range consistent with modest job growth.
In addition, the Federal Housing Finance Agency released its home-price report for March, saying U.S. home prices rose a seasonally-adjusted 1.3% in March.
Markit also said its flash manufacturing purchasing managers for May fell to 51.9, its lowest reading since October, though the agency’s overall report was mixed.
Prices for the 10-year U.S. Treasury slackened, raising yields back to Wednesday’s 2.03%. Treasury prices and yields move in opposite directions.
Oil prices dipped 81 cents to $93.47 U.S. a barrel.
Gold prices remained positive $15 at $1,382.40 U.S. an ounce
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