The Toronto stock market was deep in the red Friday and commodity prices weakened amid disappointing earnings and trade data from the United States.
The S&P/TSX composite index dropped 94.12 points to 12,145.35 while the TSX Venture Exchange lost 12.95 points to 1,527.55.
The Canadian dollar was also lower despite a strong domestic trade report, down 0.59 of a cent to 97.61 cents US.
Statistics Canada reported that Canada's international trade balance improved dramatically in November, going from a deficit of $487-million in October to a surplus of $1.1-billion in November. The agency said exports increased 3.2 per cent, led by energy and automotive products. Imports declined 0.8 per cent.
U.S. markets were negative after the U.S. Commerce Department reported the American trade deficit with the rest of the world increased 10.4 per cent to $47.8-billion (U.S.), the highest level since June. Exports fell for a second straight month while imports rose to an all-time high, driven by rising demand for oil and foreign-made cars.
American exports dropped 0.9 per cent in November from the previous month. Fewer shipments of autos and capital goods, such as aircraft and machinery, were the key reason. A decline in exports weakens U.S. growth and exports could drop even further in the months to come.
The Dow Jones industrial index lost 96.38 points to 12,374.64.
The Nasdaq composite index fell 21.12 points to 2,703.58 while the S&P 500 index was down 10.59 points to 1,284.91.
There was also disappointment on the earnings front after JPMorgan Chase reported that its income fell 23 per cent in the fourth quarter of 2011 after the bank set aside a large sum for litigation reserves and its investment banking income declined. The largest bank in the U.S. said Friday it earned $3.7-billion (U.S.), or 90 cents per share, three cents short of estimates. Its stock was down 4.48 per cent to $35.20.
The euro zone government debt crisis also provided more cause for worry after The Wall Street Journal reported that ratings firm Standard & Poor's could move to downgrade several countries in the region as early as later in the day. Bond yields rose on Italian, Spanish and Belgian government bonds following the report.
Traders had earlier been relieved at successful government bond auctions in Italy and Spain, which had raised hopes that policymakers may finally be getting a grip on Europe's debt crisis after months of procrastination and indecision.
“It's really mixed news on Europe today, the downgrade is definitely negative,” said Jeff Bradacs, portfolio manager at Manulife Asset Management.
“But borrowing by Italy came in at lower rates than expected and that's partially driven by European banks getting low funding costs through the ECB and buying the Italian bonds.”
Losses in oil prices picked up after the release of the American trade data with the February contract in New York off 55 cents to $98.55 a barrel. The TSX energy sector lost one per cent with Canadian Natural Resources (TSX:CNQ) down 63 cents $37.74 while Imperial Oil (TSE:IMO) shed 82 cents to $45.11.
The base metals sector was down 1.6 per cent as the March copper contract edged four cents lower to $3.61 a pound. Teck Resources (TSX:TCK.B) declined 72 cents to $39.26 while HudBay Minerals (TSX:HBM) gave back 28 cents to $10.23.
The gold sector was off 1.3 per cent while February bullion declined $14.90 to US$1,632.80 an ounce. Barrick Gold Corp. (TSX:ABX) faded 62 cents to $49.04 and Goldcorp Inc. (TSX:G) fell 61 cents to $46.17.
Financials were also a major weight on the TSX with Royal Bank (TSX:RY) down 57 cents to $52.20 while Scotiabank (TSX:BNS) lost 43 cents to $51.77.
Industrials were also weak with Canadian National Railway (TSX:CNR) down $1.26 to $78.04.
Losses on European markets also picked up during the morning as London's FTSE 100 was off 0.73 per cent, Frankfurt's DAX lost 0.81 per cent and the Paris CAC 40 was off 0.29 per cent.