Rising gold prices gave the Toronto Stock Exchange a small gain late morning Tuesday.
Investors digested some weak earnings reports and the Bank of Canada warned of slowing economic conditions while keeping its key interest rate unchanged at 1 per cent.
The S&P/TSX composite index moved up 11.41 points to 12,173.7 and the TSX Venture Exchange was up 5.88 points at 1,566.21.
The central bank also said the global economy is slowing and Europe may actually fall back into a brief recession. It added that Canada's economy will have a tougher time getting back to full speed.
The Bank of Canada estimated Canada's economy likely grew a modest 2.1 per cent this year — most of it in the first quarter — and will fare even worse at 1.9 per cent next year. Both numbers were 0.7 percentage points less than the bank had projected in July.
"It sends a signal that you aren't getting a rate hike any time soon," said Gareth Watson, vice-president investment management and research, Richardson GMP Ltd.
"Supposedly we're doing better than everyone else, which maybe as a snapshot in time is true, but over the long-run (the economy) is going to follow the path of the big leaders."
The Canadian dollar plunged following the bleak economic assessment by the central bank after earlier moving past parity with the U.S. dollar.
The loonie was down 1.32 of a cent to 98.37 cents U.S. after rising as high as 100.11 cents U.S.
The currency failed to benefit from strong economic data from late summer as Statistics Canada said that retail sales rose a stronger than expected 0.5 per cent to $37.8-billion in August, higher than the 0.2 per cent gain that economists expected.
The agency said the increase in August was led by higher sales at gasoline stations and at motor vehicle and parts dealers.
U.S. indexes were lower as the Dow Jones industrial index fell 136.5 points to 11,777.12, the Nasdaq composite index dropped 35.95 points to 2,663.49 and the S&P 500 index declined 17.41 points to 1,236.78.
Earnings misses included Canadian Pacific Railway Ltd. , which said its net earnings were $186.8-million or $1.10 per share, missing analyst estimates by a penny as higher fuel prices and operating expenses offset stronger revenues. The railway's revenue came in at $1.34-billion (U.S.), which met expectations. Its shares fell $1.05 to $58.78.
Shares in U.S. manufacturing conglomerate 3M fell 4.83 per cent to $78.21 (U.S.) as it lowered its earnings expectations for the year as slowing growth overseas continues to impact its business.
Buyers were also discouraged by data showing that consumer confidence in the U.S. economy fell in October to its lowest level since 2009 when the U.S. was in the middle of a deep recession.
The Conference Board says that its Consumer Confidence Index dropped more than six points to 39.8, down from a revised 46.4 in September.
The TSX found support from the gold sector as bullion prices advanced with the December gold contract up $35.30 to $1,687.60 (U.S.) per ounce. The group gained 2.54 per cent as Barrick Gold Corp. climbed $1.42 to $47.87 (U.S.) while Goldcorp Inc. improved by $1.27 to $47.71.
Oil prices charged ahead for a third day as markets grow more optimistic that European leaders are set to deliver a comprehensive plan to deal with the region's debt crisis on Wednesday.
Among the measures, the 17-country euro zone is set to boost the powers of its bailout fund. German lawmakers said the fund's lending capacity could reach more than $1-trillion.
The plan is also expected to lighten Greece's debt load by having the country's private bondholders agree to sharper losses. Meanwhile, ailing European banks will be asked to raise fresh capital to protect them against such losses.
"What the market has been absolutely dying for is details," Mr. Watson said.
"They want specifics, they want numbers. They want to know if you're a Greek bondholder what is the haircut you're finally going to take so we can get Greece off the map and stop talking about them."
The December crude contract on the New York Mercantile Exchange was ahead $2.08 at $93.35 (U.S.) a barrel. Crude had surged almost $4 (U.S.) a barrel Monday in the wake of data showing China's manufacturing sector expanded in September, lowering fears that the country's economy is in for a hard landing as it tries to bring down high inflation.
The energy sector stepped back 0.64 per cent as Suncor Energy declined 33 cents to $31.25 while Talisman Energy was down 21 cents at $13.93.
The base metals sector moved back 0.89 per cent as copper prices stepped back, down five cents to $3.40 (U.S.) a pound. Chinese manufacturing data helped send the metal 23 cents higher on Monday. China is the world's biggest consumer of the metal, which is often used as a barometer of global economic health since it is used in so many applications, from wiring to infrastructure.
Teck Resources lost 32 cents to $36.48 and First Quantum Minerals fell 31 cents to $17.52.
The financial sector declined 0.41 per cent with Royal Bank down 27 cents to $47.81.
Online investment broker TD Ameritrade says its fiscal fourth-quarter profit shot up 44 per cent to $163.7-million (U.S.) or 29 cents per share, missing estimates by 2 cents. Revenue came in at $703.5-million, which missed estimates of $713.6-million.
TD Bank, which owns a minority stake of the U.S. online broker, said it expects TD Ameritrade's fourth-quarter earnings to translate into a contribution of $54-million to the Canadian bank's fiscal fourth-quarter net profits. TD shares fell 57 cents to $74.39.
In Asia, Japan's Nikkei 225 index closed 0.9 per cent lower, South Korea's Kospi lost 0.5 per cent while Hong Kong's Hang Seng index rose 1.1 per cent. Benchmarks in mainland China also advanced.
European bourses were mixed with London's FTSE 100 down 0.68 per cent, Frankfurt's DAX down 0.4 per cent and the Paris CAC 40 off 1.61 per cent.
Coventree Inc. has been informed by the Ontario Securities Commission that the regulator will seek an order requiring the company and its founders to pay $16.5-million in combined costs and penalties. The firm came to prominence during the so-called ABCP crisis in 2007. The $32-billion ABCP market in Canada collapsed over concerns that some of the notes were backed by U.S. subprime mortgages. Coventree shares jumped 80 cents to $3.50.
Futuremed Healthcare Products Corp. has agreed to a takeover by Cardinal Health Canada Inc. Cardinal is offering $8.15 per share in a deal that has an estimated value of $165-million. Futuremed shares surged $1.89 to $8.09.