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New tax laws, passed into law in mid-2010 and only now nearing enforcement, could require life and personal and commercial insurers to pay GST/HST tax on reinsurance arrangements with related businesses in other countries. The changes would be retroactive to 2005, and could cost the industry hundreds of millions of dollars.JONATHAN HAYWARD/The Canadian Press

The Canadian dollar closed higher Tuesday after tumbling more than a cent Monday in the wake of steep drops in commodity prices amid weaker than expected growth in China.The loonie gained 0.47 of a cent to 97.99 cents (U.S.). Performance was helped along after Statistics Canada said manufacturing sales rose 2.6 per cent to just under $50-billion (Canadian) in February. It was the largest increase since July, 2011.

Other data out during the morning from the International Monetary Fund said Canada's economy will likely slow to about 1.5 per cent this year from 1.8 per cent last year, before picking up to 2.4 per cent in 2014.

The global lending organization has also cut its forecast for global growth to 3.3 per cent this year from its forecast in January of 3.5 per cent.

Losses were triggered on financial markets Monday after data showed that growth in China slowed to 7.7 per cent in the first quarter from 7.9 per cent in the final quarter of last year. Growth had been expected to accelerate slightly to 8 per cent.

Oil and copper sold off as the data raised concerns about demand prospects.

Also, gold prices fell $140 (U.S.) to their lowest level in more than two years amid fears that European governments may sell the precious metal as part of their debt-fighting measures.

The June bullion contract on the New York Mercantile Exchange closed up $26.30 to $1,387.40 an ounce on Tuesday.

Prices were also pressured Monday by Goldman Sachs having lowered its average gold price forecast for 2013 last week.

Also, some U.S. Federal Reserve officials have also been calling for an early end to the central bank's bond-buying program. If that happens, it would likely cause U.S. interest rates to rise, resulting in an appreciation of the U.S. dollar. That gives traders another reason to sell gold, since they see the metal as an alternative to holding dollars.

Oil prices were flat amid concerns over the global economic recovery as the May crude contract on Nymex added 1 cent to $88.72 a barrel after tumbling about $6 over the past three sessions.

May copper in New York was up 3 cents at $3.31 a pound after the Chinese data pushed prices down 8 cents.

China has been the world's biggest purchaser of copper, which is viewed as an economic bellwether because it is used in so many applications.

Meanwhile, traders looked ahead to Wednesday when the Bank of Canada makes its next announcement on interest rates. The central bank likely won't be raising rates any time soon, with most economists expecting it not to make a move until at least the third quarter of 2014.

However, traders will look to the bank's accompanying statement to see if it is revising its economic forecast.

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