The Toronto Stock Exchange was in the red at midday Tuesday as commodity prices fell amid weak data out of China that could indicate a decline in demand for resources.
The S&P/TSX composite index lost 73.01 points to 12,406.69, rebounding slightly from a 133-point loss just after the market opened. The junior TSX Venture Exchange dropped 19.73 points to 1,579.05.
The heavyweight energy and mining sectors led the broad-based decline on the main index as commodity prices fell.
The Canadian dollar shed 0.52 of a cent to 100.75 cents (U.S.) as traders flocked to the greenback on fears of slower Chinese growth.
Mining giant BHP Billiton said it expects iron ore demand in China will flatten somewhat as steel production in the country slows. Also on Tuesday, China raised the price of retail gasoline for the second time in two months. Meanwhile, home prices dropped in 45 Chinese cities in February as the government moved to cool property speculation. And Chinese officials stated they expect auto sales to miss forecasts this year.
"Together, this worked against the positive risk tone that has been unveiled over the prior few sessions," said Mark Chandler, head of Canadian FIC strategy at RBC Dominion Securities Inc.
Gold bullion resumed its recent downward trend after a double-digit gain Monday, falling $11.40 to $1,655.90 (U.S.) an ounce. Copper prices dropped seven cents to $3.84 (U.S.) a pound. April oil lost $1.59 to $106.50 (U.S.) a barrel.
Shares in oil company Canadian Natural Resources (TSX:CNQ) were down 61 cents to $34.89 (CAN), while shares in base metals miner HudBay Minerals (TSX:HB) shed 18 cents to $11.40.
The sell-off came amid some deal making in the agricultural and financial sectors.
Grain-handling company Viterra Inc. (TSX:VT) said it has agreed to be acquired by Switzerland-based Glencore International in a deal valued at $6.1-billion or $16.25 per share.
The Regina-based company says the transaction also includes an agreement that would see Calgary-based Agrium Inc. (TSX:AGU) and privately held Richardson International, based in Winnipeg, buy the majority of Viterra's Canadian assets for $2.6-billion in cash.
Viterra shares fell five cents to $15.92 while Agrium shares added $1.91 to $87.65.
Meanwhile, the Royal Bank of Canada (TSX:RY) said it is acquiring the Latin American, Caribbean and African private banking business of Coutts, the wealth division of Royal Bank of Scotland Group, for an undisclosed price. RBC shares fell 33 cents to $57.93 amid a broad decline in the financial sector.
Wall Street also moved lower, with the Dow Jones industrial index down 69.36 points to 13,169.77, the Nasdaq 18.05 points lower at 3,060.27 and the S&P 500 slipping 5.99 points to 1,403.76.
It's a quiet day for economic data, with U.S. housing starts the only item on the North American agenda, aside from a speech from federal reserve chairman Ben Bernanke.
The U.S. Commerce Department said builders started work on slightly fewer homes in February, but they began preparing for what could be the healthiest spring buying season since the housing bubble burst. Builders broke ground on a seasonally adjusted annual rate of 698,000 homes last month. That's down 1.1 per cent from January.
Data on U.S. home sales and jobless claims later this week is also likely to provide fresh clues for the market. A private survey of the U.S. home-building industry on Monday found that companies are increasingly hopeful that home sales will rise in coming months.
European indexes are falling as well. Germany's DAX fell 1.2 and France's CAC-40 was 0.9 per cent lower. The FTSE 100 index of leading British shares was down 1.2 per cent.