The Toronto stock market posted a triple-digit decline Tuesday afternoon, heading toward a negative close that would end a five-day rally.
The S&P/TSX Composite Index sank 152.90 points, or 1.2%, to end the day at 12,530.71
The Canadian dollar reacquired 0.57 cents to 101.84 cents U.S.
In Canadian earnings, Sears Canada Inc. reported a second-quarter loss of $2.7 million or three cents per share, compared with a profit of $20.5 million or 19 cents per share in the same 2010 quarter.
Total revenues for the national department store retailer were $1.15 billion, a 5.3% decline from $1.21 billion for the same year-ago period. Shares in the company were up nine cents to $12.99.
On matters economic, Statistics Canada reported that manufacturing sales fell 1.5% in June to $45.3 billion, a low since November 2010. Sales have declined for three consecutive months after growing steadily since May 2009.
Meanwhile, the Canadian Real Estate Association revised its forecast for national home re-sales up for the rest of the year, citing stronger than expected sales and higher prices in the second quarter. The association said sales should be slightly above 2010, up from an earlier forecast that called for a 1% dip in sales
ON BAYSTREET
The TSX Venture Exchange lost 20.46 points to 1,808.43 while the Nasdaq Canada index gave back 7.89 points to 496.57
In Toronto, all but one of the 14 subgroups lost ground today. Metals and mining stocks faltered 4.5%, while global base metals skidded 3%, and energy stocks proved 2.1% less energetic.
Only telecoms had any spark, and only 0.08% at that.
ON WALLSTREET
In New York, stocks hit session lows Tuesday afternoon after German and French leaders spoke about Europe's debt problems, while offering little in the way of action.
But after reacting negatively, stocks rebounded in the final hours of trading.
The Dow Jones Industrials were still negative, but only 76.97 points by day’s end, to 11,405.90
The S&P 500 dropped 11.73 points to 1,199.24, while the Nasdaq withered 31.75 to 2,523.45
German Chancellor Angela Merkel and French President Nicolas Sarkozy met to discuss measures announced last month to contain the sovereign debt crisis and protect the euro.
Investors were particularly disappointed that Sarkozy and Merkel said the size of the 440-billion-euro stability fund is sufficient, despite economists' push to greatly expand the bailout fund. Some are even calling for funding of more than one trillion euro.
The leaders also agreed that issuing Eurobonds, a collective bond to help pay off the debt of the peripheral countries, will not solve the European debt crisis.
Lackluster economic growth in Germany, Europe's largest economy, weighed on the broader region's economy. Gross domestic product for the Euro-zone, which is made up of the 17 nations that use the Euro, grew by a tepid 0.2% from the prior quarter -- and by 1.7% on an annual basis.
The quarterly pace of economic growth was the slowest since the end of the recession. The decline in output intensifies concerns about the future viability of the 12-year old currency union.
The long-running debt crises in Greece, Portugal and Ireland accelerated in the second quarter, and investors are also worried that Europe's larger economies -- including Spain and Italy -- may need to be bailed out.
Second-quarter results continued to roll in Tuesday.
Shares of Home Depot rose 5%, after the home improvement retailer beat earnings and sales expectations and lifted its outlook for the year.
Wal-Mart raised its full-year profit forecast as second-quarter earnings topped estimates by a penny, and sales rose 5.5% to $108.6 billion U.S. The stock jumped 4%.
The two retailers were the biggest gainers on the Dow and S&P 500.
Shares of Urban Outfitters dropped 8%, dragging on the S&P 500 and Nasdaq. While the hip retailer posted second-quarter earnings and sales ahead of expectations, the company's CEO warned of disappointing sales in August.
Dell, which reports after the bell, is estimated to post a profit of 49 cents U.S. a share, according to analysts surveyed by Thomson Reuters.
On the economic front, the government reported import prices for July rose 0.2%, excluding oil, after a 0.1% decline in the prior month. Excluding agriculture, exports increased by 0.2%. The data followed a 0.1% increase in June.
Housing starts fell 1.5% in July to an annual rate of 604,000, while permits to build new homes slumped 3.2%. Both reports came in worse than expected.
The Federal Reserve said that industrial production rose 0.9% in July, while capacity utilization climbed to 77.5% last month. Both readings came in slightly above economists' expectations.
Prices on the 10-year Treasury note powered up, lowering yields to 2.21% from Monday’s 2.28%. Prices and yields move in opposite directions.
Oil for September delivery moved backward 77 cents to $87.01 U.S. a barrel
Gold futures for December delivery rose $26 to $1,784 U.S. an ounce.
