The S&P/TSX composite index traded deep in negative territory Friday -- down 534.98 points to 9,065.20 -- as another global selloff and continued credit fears put more downward pressure on the Canadian market, sending stocks tumbling.
The latest sell-off came as Finance Minister Jim Flaherty announced that Canada Mortgage and Housing Corp. is buying up to $25 billion in mortgage-backed securities from the country's banks in an effort to maintain the availability of credit.
Flaherty and other finance ministers and central bankers from the Group of Seven industrialized nations meet today in Washington to address the financial meltdown.
Canada's big banks announced they are passing on more rate cuts to consumers and companies. TD Canada Trust and CIBC said it will lower its prime lending rate by 15-hundredths of a percentage point to 4.35 percent, effective next Tuesday.
The Bank of Nova Scotia is cutting its prime rate by a quarter-point to 4.25 percent.
The banks had come under presure earlier this week after they passed on only half of the 0.50-point cut in the Bank of Canada's overnight rate, which was part of a co-ordinated effort by major central banks to ease credit markets.
On the data front -- Statistics Canada reported that Canada generated a record number of new jobs last month. The 107,000 jobs added in September far outpaced the 12,500 expected by economists. The unemployment rate held steady at 6.1 percent.
Down south -- the Census Bureau's report on the trade balance for August showed a deficit of $59.1 billion, whereas the economy registered a $62.2 billion deficit in July. Economists had anticipated an August deficit of $59 billion.
The Bureau of Labor Statistics also reported that export prices excluding agricultural goods declined 1 percent in September. Import prices excluding oil dropped 0.9 percent.
The loonie posted its biggest one-day decline on record today, falling at one point nearly four cents against the American dollar. The Canadian dollar, was last down 2.26 cents to 84.89 cents US.
BAYSTREET
Only one of the TSX sub-groups traded higher today -- real-estate issues were up 5.70 percent.
On the downside -- gold stocks were off 11.94 percent; energy issues were down 7.57 percent and mining stocks fell 7.34 percent.
COMEX gold for December delivery rose $14.50 to $901 US an ounce.
Meanwhile, the TSX Venture Exchange was off 71.47 points to 975.81 while NASDAQ Canada stocks were down 31.79 points at 544.44.
ON WALLSTREET
Stocks on Wall Street ended an extremely volatile session narrowly mixed after a rally in the final hour of trading Friday afternoon reined in teh day's heavy losses. At the center of the whipsaw trading was the fate of the financial system, which has been buckling as credit markets remained frozen and financial firms got pummeled.
The Dow Jones Industrial Average plummeted nearly 696 points early and briefly broke below the 8000 level, only to recover just as sharply and briefly touch positive territory. After another swoon and recover, the Dow ended down 128 points, or 1.5 percent, at 8,451.19.
The S&P 500 lost 10.67 points, or 1.2 percent, to 899.25 and the Nasdaq, however, ended up 4.39 points, or 0.3 percent, at 1,649.51.
Battered financial firms Morgan Stanley and Goldman Sachs were in focus. Ratings agency Moody's said it may cut Morgan Stanley's credit rating, and lowered its credit outlook for Goldman to negative.
Amid the increasing concern about banks, the U.S. government was considering guaranteeing bank debt and insuring all domestic bank deposits, according to a report in The Wall Street Journal.
The report precedes a meeting of the Group of Seven industrial nations Friday. The economic powers plan to discuss a coordinated response to the global credit crisis.
Bank of America shares edged higher following reports that it may sell a portion of its 11 percent stake in China Construction Bank. The banking titan also appeared set to carry out its acquisition of Merrill Lynch, despite declines in both firms' stock prices, according to a report in the Financial Times.
In earnings -- General Electric reported third-quarter financial results that were in line with estimates. The company posted a 10 percent drop in earnings from continuing operations and an 11 percent gain in revenue, meeting analyst expectations.
Longer-dated U.S. Treasury securities were falling. The 10-year was down 22/32 to yield 3.87 percent, and the 30-year was declining 20/32, yielding 4.14 percent. The American dollar was climbing vs. the euro and pound, but falling against the yen.
Oil prices plunged to a 13-month low Friday on bets that the slowing global economy will drag down oil demand.
U.S. light crude oil for November delivery fell $5.93 to $80.66 US a barrel on the New York Mercantile Exchange. Prices slipped on continued bets that the slowing global economy will hurt demand.
