The Toronto stock market was lower Tuesday at midday, with traders cautious amid mixed earnings reports and worries that negotiations to cut Greece's debt could fall apart.
The S&P/TSX composite index fell 86.01 points to 12,435.69 while the TSX Venture Exchange was down 9.7 points to 1,579.22.
The Canadian dollar was down 0.34 of a cent to 98.93 cents U.S. despite a stronger-than-expected retail sales report for November.
Statistics Canada reported that sales rose a better-than-expected 0.3 per cent to $38.7-billion. It was the fourth consecutive month retail sales increased and the results beat economists' expectations for a 0.2 per cent rise.
The agency said that seven of 11 retail subsectors, representing 65 per cent of total retail sales, reported gains.
U.S. markets were generally weak with the Dow Jones industrial average down 40.38 points to 12,668.44.
The Nasdaq composite index added 1.61 points to 2,785.78 and the S&P 500 index declined 3.4 points to 1,312.6.
Buying sentiment was muted after the finance ministers of the countries that use the euro announced that Greece would pay less than four per cent interest on the new bonds creditors will get in a debt swap meant to cut what Greece owes by about 100-billion euros.
That interest rate is below what the creditors have been willing to accept.
A deal with creditors is crucial to the stability of Greece and the eurozone since it's clear there's no way Athens can ever pay back all that it owes. Banks that hold Greek debt have already been asked to take a 50 per cent loss on those investments — and some think even that writedown isn't big enough.
Time is running out as Greece has several billions of euros in debt coming due in March.
On the earnings front, Canadian National Railway Co. (TSX:CNR) shares were off $2.62 to $76.98 even as the company announced it is raising its quarterly dividend by 15 per cent to 37.5 cents per share, starting with the next payout in March. CN generated a profit of $592-million or $1.32 per diluted share in the fourth quarter of 2011, as revenue rose 12 per cent from a year before to a record $2.38-billion.
McDonald's net income rose by 11 per cent in the fourth quarter to $1.38-billion (U.S.) or $1.33 a share. Revenue jumped 10 per cent to $6.82-billion, slightly above expectations of $6.81-billion but its shares slipped 1.96 per cent to $98.97.
Health-care products company Johnson & Johnson reported fourth-quarter net income slumped 89 per cent to $218-million (U.S.) or eight cents a share. Excluding special items, adjusted earnings per share were $1.13, four cents better than forecast. Sales narrowly missed expectations, coming in at $16.26-billion and its shares added 24 cents to $65.24.
Kimberly-Clark Corp., the maker of Kleenex, Huggies and other household goods, reported that its fourth-quarter net income fell 19 per cent to $401-million (U.S.) or $1.01 a share as rising costs dampened its performance. Its 2012 adjusted earnings forecast was below Wall Street's expectations and its shares fell 2.56 per cent to US$71.64.
Traders also took in a glum report from the International Monetary fund which said recession in Europe will slow the global economy this year.
The IMF forecasts global growth of 3.25 per cent this year, slower than the four per cent pace it projected in September, which doesn't bode well for earnings and revenue growth.
"The world we're living in is one in which revenue growth is going to be very constrained even if the GDP readings are positive," said John Johnston, chief strategist at David Rea Ltd.
"And that tells us with all the cost cutting that the trend growth rate in earnings for the next several years is going to be in the low-to-mid single digits."
The financials sector weighed on the TSX, down 0.74 per cent as Scotiabank (TSX:BNS) stepped back 45 cents to $54.10 while Royal Bank (TSX:RY) dropped 91 cents to $53.91.
Uncertainty over a Greek debt deal also depressed commodity markets where the March crude contract on the New York Mercantile Exchange lost 60 cents to $98.98 a barrel.
Prices climbed over $1 Monday on concerns that Iran could block shipments of crude in the wake of the European Union's decision to embargo imports of Iranian oil.
The TSX energy sector lost 0.27 per cent as Talisman Energy (TSX:TLM) gave back 15 cents to $12.35 and Imperial Oil (TSX:IMO) fell 62 cents to $47.36.
The base metals component eased 0.09 per cent as March copper was unchanged at US$3.79 a pound. Lundin Mining (TSX:LUN) declined 19 cents to $5.04.
The gold sector declined 0.93 per cent while gold prices also fell with the February contract in New York down $9.30 to US$1,669 an ounce. Barrick Gold Corp. (TSX:ABX) faded 97 cents to $46.31.
Investors continued to express their unhappiness over the management shakeup at Research In Motion (TSX:RIM) that saw co-CEOs Jim Balsillie and Mike Lazaridis step down. They were unimpressed after the new CEO, Thorsten Heins, told analysts he didn't think drastic change was needed at the BlackBerry maker. Its shares fell 49 cents or four per cent to $15.18 on top of a slide Monday of over nine per cent.
Elsewhere in the tech sector, Ontario-based semiconductor maker Gennum Corp. (TSX:GND) said Monday that it is being acquired by Semtech Corp.(Nasdaq:SMTC) for $500 million. Gennum stockholders will receive $13.55 in cash for each common share, more than double the company's closing price of $6.15 per share Monday on the Toronto Stock Exchange. On Tuesday, Gennum shares soared $7.28 or 118.37 per cent to $13.43.
European markets headed lower with London's FTSE 100 index down 0.74 per cent while Frankfurt's DAX and the Paris CAC 40 dropped 0.72 per cent.