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Traders work on the floor of the New York Stock Exchange in this file photo. (© Brendan McDermid / Reuters/REUTERS)
Traders work on the floor of the New York Stock Exchange in this file photo. (© Brendan McDermid / Reuters/REUTERS)

Inside the Market

At the open: TSX falls as commodities take a tumble Add to ...

North American stock markets stumbled at the start of trading, with worries over the looming U.S. fiscal cliff once again turning investors away from riskier assets. Even gold, normally a haven during skittish times in equity markets, is suffering significant losses.

In early trading, the S&P/TSX index is down 101 points, or 0.8 per cent, at 12,010; the S&P 500 is down nearly 8 points, or 0.5 per cent, at 1,391; and the Dow Jones industrial average is off 57 points, or 0.4 per cent, at 12,820.

The February gold futures contract in New York is down 1.9 per cent at $1,708 (U.S.), while crude oil is down 1.8 per cent at $85.56. Not surprisingly, materials is the worst performing TSX sector this morning, down by 1.7 per cent.

Weakness in oil is being blamed on the budget uncertainty in the U.S. Gold also got hit with some end-of-month selling and options expirations, as well as renewed strength in the U.S. dollar against major currencies.

The words of U.S. Senate majority leader Harry Reid late Tuesday are continuing to haunt stock markets today. Mr. Reid said that talks on averting the U.S. fiscal cliff of tax increases and spending cuts had made little progress.

Many think the negative stock market reaction both Tuesday and this morning is overdone. Republicans and Democrats got together this week for the first serious post-election talks on the fiscal cliff, so some negative comments shouldn't be that surprising given the political posturing that comes along with such negotiations.

The knee-jerk reaction to the comments also suggest that the market may rally if and when news comes out of Washington that the negotiations are making some progress. Today, U.S. President Barack Obama will be meeting with business leaders for discussions on the fiscal problems.

U.S. new home sales data today did little to improve the mood of market players. October new home sales fell to 368,000, down from  a revised 369,000 rate in September that was weaker than initially reported. Economists had expected an increase to 390,000.

The U.S. economy will be in focus again this afternoon as the Federal Reserve releases its Beige Book at 2 p.m. (ET), which should show a modest pace of economic growth in the U.S. amid a still struggling labour market.

Here's a look at some of the stocks moving on early news this morning:

Research In Motion Ltd. has lost a contract dispute over the use of Nokia patents in a case which could halt sales of its BlackBerry phones if it does not reach a deal to pay royalties to the Finnish company. RIM shares were down about 5 per cent at the open but have since partially recovered, down by 1.4 per cent at $10.57 (U.S.) at 1015 a.m. (ET).

Costco says it will pay shareholders a special dividend of $7 per share next month in addition to the wholesale club operator's regular quarterly dividend. Shares are up nearly 5 per cent in early trading.

CNOOC Ltd. is facing new delays in its effort to close its proposed $15.1-billion acquisition of Calgary-based Nexen Inc., after a deadline for U.S. approval of the transfer of Nexen’s Gulf of Mexico assets expired without a decision. Investors don't appear too concerned, with Nexen's TSX shares down just 0.3 per cent at the open.

CGI Group Inc. swung to a loss in its fiscal fourth quarter even as the information technology and business process services firm rounded out a quarter and a year that saw increases in revenue. Shares are down nearly 2 per cent at the open.

Trading firm Getco Holding Co. offered to take control of Knight Capital Group Inc. in a deal that it said valued the electronic trading firm at $3.50 a share. Knight’s shares are up 15 per cent.

Green Mountain Coffee Roasters Inc. is up 22 per cent after the company reported better-than-expected fourth-quarter profit late Tuesday.

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