The Toronto stock market was lower Friday as traders looked ahead to next week's U.S. Federal Reserve meeting and hope that the central bank will provide clues as to whether it plans to ease off on some of its economic stimulus.
The S&P/TSX composite index declined 52.64 points to 12,224.49.
The Canadian dollar was off 0.04 of a cent to 98.33 cents US amid a disappointing update on Canadian manufacturing.
Statistics Canada says manufacturing sales fell 2.4 per cent in April to $48.2-billion.
It's the fourth decline in five months and the largest monthly percentage drop since August 2009.
The agency says lower sales in the petroleum and coal product and primary metal industries were largely responsible for the decline.
U.S. indexes were also in the red amid signs of a weakening American manufacturing sector and consumer sentiment.
The Dow Jones industrials declined 60.36 points to 15,115.72 as May industrial production was flat. Economists had expected a 0.3 per cent increase after production fell by 0.5 per cent in April.
And the University of Michigan's consumer confidence index came in at 82.7, well below expectations that it would remain at a five year high of 84.5.
The Nasdaq was down 14.12 points to 3,431.24 and the S&P 500 index gave back 4.22 points to 1,632.14.
Concerns about Fed intentions have weighed on markets since late last month. That's when Fed chairman Ben Bernanke said that the Fed might pull back on its US$85-billion-a-month bond-buying program, known as quantitative easing, if economic data improves, especially hiring.
The QE program has underpinned a strong rally on U.S. markets.
The Fed holds its next regularly scheduled meeting on interest rates next Tuesday and Wednesday and wraps up with a news conference by Bernanke.
Hopes for more details were fuelled Thursday by a Wall Street Journal story that suggested Bernanke will likely use next week's meeting to try to calm market worries that the central bank is in a hurry to moderate its bond purchases.
"I think (the nervousness) is a reflection of the amount of leverage that is in the market that there's a lot of speculators," said Norman Raschkowan, North American strategist with Mackenzie Financial Corp.
"It's no longer the big New York banks that are leveraged up and speculating, it's foreign investors, it's hedge funds, it's whoever. And that's why anytime one of the Fed governors sneezes, there's someone who is panicking because they've got this leveraged position that's in danger of going under water."
The base metals sector led decliners, down almost one per cent as July copper was up one cent to $3.20 (U.S.) a pound. First Quantum Minerals gave back 36 cents to $17.11.
Techs were also weak with CGI Group down 66 cents to $30.10. But BlackBerry was ahead 15 cents to $14.85, adding to a gain of about six per cent Thursday after Societe Generale raised its rating on the stock to "buy" from "sell," saying channel checks show the Canadian smartphone maker's new devices are selling well.
Financials shed 0.6 per cent with TD Bank down 65 cents to $81.59.
The telecom sector added to a string of losses, down 0.6 per cent.
Speculation about cutting back on the QE program has had the effect of pushing U.S. Treasury yields sharply higher, which in turn has had a negative effect on TSX interest-rate sensitive sectors such as real estate, utilities, telecom and pipelines.
But Canada's telecom sector has also been pressured after Ottawa quashed the idea that big telecoms could take over the spectrum of smaller players. Federal Industry Minister Christian Paradis said current rules would stand, leading to Telus to abandon its plan to buy Mobilicity.
BCE Inc. gave back 43 cents to $44.20 while Rogers Communications dropped 34 cents to $45.55.
The gold sector was off about 0.4 per cent as August bullion rose $10.10 to $1,387.90 (U.S.) an ounce. Goldcorp Inc. faded 50 cents to $28.42.
The July crude contract on the New York Mercantile Exchange ahead $1.17 to $97.86 a barrel. The energy sector was off 0.35 per cent. Cenovus Energy was down 34 cents to $29.43.
Markets have also been weighed down by concerns that the Bank of Japan has done all it is prepared to do to stimulate the Japanese economy.
In April, the Bank of Japan announced a massive stimulus in an attempt to get inflation up to two per cent. The euphoria that drove the Nikkei up to five-year highs has been followed by wild fluctuations. The index is now around 20 per cent down from its May 23 peak, leaving the market in bear market territory.
Tokyo's Nikkei 225, the regional heavyweight, gained 1.9 per cent in Friday trading, recovering some of its losses after Thursday's 6.4 per cent plunge .
European bourses were positive with London's FTSE 100 index ahead 0.03 per cent, Frankfurt's DAX rose 0.09 per cent and the Paris CAC 40 was up 1.22 per cent.