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The Globe and Mail

At midday: Stocks down after Republicans reject budget proposal

North American stocks were down slightly in midday trading on Friday, with budget talks in Washington bogged down over party lines.

The S&P 500 was down 2 points or 0.1 per cent, to 1414. The blue-chip Dow Jones industrial average was down 19 points or 0.2 per cent, to 13,003. In Canada, the S&P/TSX composite index was down 9 points or less than 0.1 per cent, to 12,194.

Congressional Republicans rejected the Obama administration's budget proposal of $1.6-trillion in tax increases, even as the President hit the road to sell it to Americans. Politicians have been in talks for some time in an effort to avoid the looming fiscal cliff of automatic tax increases and spending cuts should they not reach a budget agreement by the end of the year.

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Meanwhile, U.S. consumer spending fell 0.2 per cent in October, worse than the flat reading expected by economists. However, the dip was attributed to effects from Hurricane Sandy, which walloped the east coast in October.

Within the S&P 500, consumer discretionary stocks were the biggest laggards, falling 0.5 per cent. Technology stocks fell 0.4 per cent and industrials and financials fell 0.3 per cent each.

Yum Brands Inc. fell 9.6 per cent after the restaurant company said that sales in Chinese stores open for at least a year would fall 4 per cent in the fourth quarter, compared to sales growth of 21 per cent last year. McDonald's Corp., which also has big operations in China, was unchanged.

Within Canada's benchmark index, materials and technology stocks fell 0.4 per cent each, while energy stocks and financials were relatively flat.

Key commodities were mixed. Crude oil rose to $88.52 (U.S.) a barrel, up 45 cents. Gold fell to $1,725 an ounce, down $2.60.

In Europe, the U.K.'s FTSE 100 fell less than 0.1 per cent while Germany's DAX index rose less than 0.1 per cent. Germany approved the latest bailout package for Greece.

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