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U.S. stocks sold off on Thursday morning, following a worsening employment picture and a Wall Street Journal article in which Henry Paulson, the U.S. Treasury Secretary, called Washington's aid proposals "bailouts" for reckless lenders and speculators.

The Dow Jones industrial average fell 95 points, to 12,599, in early trading. All 30 stocks in the blue-chip index were down, led by General Motors Corp., American International Group Inc. and American Express Co. All three stocks fell by about 2 per cent.

In the U.S., weekly jobless claims rose to 373,000, well above the consensus expectation for 350,000. As well, last week's jobless claims were revised upward by 5,000.

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"Of all the major indicators we use to signal recession, only the ISM manufacturing index is still some way above the usual trigger level," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a note.

In Canada, the S&P/TSX composite index rose 13 points in early trading, to 13,791. Canadian Imperial Bank of Commerce shares fell 1.5 per cent, to $68, after the bank reported a quarterly loss. But other banks that reported far rosier earnings were not faring much better. Toronto-Dominion Bank shares fell 0.4 per cent, to $67.47, even though the bank reported strong earnings in its first quarter. National Bank bucked the trend: its shares rose 0.3 per cent, to $51.24.

Energy stocks, led by Canadian Natural Resources Ltd., were a noticeable bright spot.

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