The Toronto stock market was little changed Friday following a strong advance the previous session as traders took a wait-and-see attitude on where negotiations go on extending the U.S. debt limit.
The S&P/TSX composite index edged 12.75 points lower to 12,881.66, pressured by falling gold stocks as optimism about ending the U.S. government impasse pushed bullion sharply lower.
U.S. indexes were slightly higher on top of big gains registered Thursday, with the Dow Jones industrials up 22.67 points to 15,148.74, the Nasdaq ahead 6.68 points to 3,767.42 and the S&P 500 index up 1.55 points at 1,694.11.
The Canadian dollar was up 0.08 of a cent to 96.27 cents U.S. as job creation for September narrowly beat modest expectations and the unemployment rate fell to the lowest level since December 2008.
Statistics Canada said job creation came in at 11,900 last month while the jobless rate fell 0.2 of a point to 6.9 per cent as fewer young people looked for work. Economists had been looking for the economy to have created about 10,000 jobs in September after cranking out almost 60,000 in August.
North American markets surged Thursday after Republican House Speaker John Boehner proposed extending the debt limit through Nov. 22, conditioned on President Barack Obama agreeing to negotiate over spending cuts and the government shutdown.
Hopes rose that the U.S. would avoid a possible default after the current borrowing limit expires next Thursday.
"The sentiment changed about 180 degrees," said Bob Gorman, chief portfolio strategist at TD Waterhouse. But he cautioned that it's far too early to sound the all-clear on the debt ceiling issue.
"The probability is extremely high that ultimately something gets sorted out here, (but) they are so far apart from an ideological standpoint that negotiations could be quite difficult. So I wouldn't be surprised to see sentiment worsen in the next couple of trading days, particularly if you don't see something a little firmer over the course of the weekend."
The president conferred with Boehner and other GOP House leaders on Thursday. They reported no agreement but said talks would continue.
Obama planned a White House meeting with GOP senators late Friday morning. Senate Republicans said they want to discuss ideas for ending the partial U.S. government shutdown and debt limit standoff.
Financials led TSX advancers with Sun Life Financial ahead 31 cents at $33.64.
Oil prices fell with the November crude contract on the New York Mercantile Exchange down $1.46 to $101.55 (U.S.) a barrel but the energy sector rose 0.2 per cent. Imperial Oil advanced 47 cents to $45.12.
Moody's Investor Services has cut Talisman Energy's rating outlook to negative from stable. Moody's said the downgrade reflects the uncertain outcome of the portfolio transformation taking place under the company's strategic repositioning.
The change in outlook comes just days after activist investor Carl Icahn disclosed a six per cent stake in the company and Talisman shares gained four cents to $12.77.
The gold sector was the weakest component, down 2.3 per cent as December bullion faded $29 to $1,267.90 (U.S.) an ounce. Barrick Gold dropped 51 cents to $18.03.
Base metal stocks also pressured the TSX, down one per cent even as December copper gained two cents to $3.27 (U.S.) a pound. Teck Resources shed 22 cents to $26.51.
In corporate news, fertilizer giant Potash Corporation of Saskatchewan Inc. is reducing its earnings guidance for the third quarter to reflect lower sales. The company says earnings per diluted share now are expected to come in at about 41 cents, down from the 45 to 60 cents per share it predicted back in July. Potash shares lost 72 cents to $32.25 on the TSX.
On the earnings front, JPMorgan Chase, the biggest U.S. bank by assets, is reporting a surprise third-quarter loss after a big charge for legal expenses. The bank lost $400-million (U.S.) or 17 cents a share in the quarter, compared with a then-record $5.7-billion (U.S.) profit a year earlier.
Analyst had expected earnings of the $1.19 (U.S.) a share. Revenue fell eight per cent, to $23.9-billion, missing analysts' estimate of $24.1-billion (U.S.). JPMorgan shares gained seven cents to $52.44 (U.S.).
European bourses were mixed with London's FTSE 100 index up 0.75 per cent, Frankfurt's DAX rose 0.3 per cent and the Paris CAC 40 was off 0.02 per cent.