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Canadian financial markets feel U.S. pain

Canada has been caught up in concerns over the world's economic prospects as stock markets had their biggest one-day decline in two years and the dollar plunged.

The Toronto Stock Exchange composite index lost 436 points Thursday and more than 200 points on Friday, blamed by economists on nagging doubts over the economic realities in the United States, Canada's biggest trading partner.

The drop on Canada's major exchange put the index 8 percent lower than where it was at the start of the year.

As Canada is an oil-exporting nation, the drop of more than $5 a barrel cut the Canadian dollar's value to about $1.02 U.S., down from more than $1.06 a week earlier.

Economic data showing weaker U.S. manufacturing levels, lower consumer spending and slower job growth "suggests there is now the risk of a serious economic slowdown," said Sid Mokhtari of CIBC World Markets.

News on Friday that Canada's jobless rate was the lowest since December 2008 at 7.2 percent, down from 7.4 percent in June, did little to help the stock market or dollar.

The economy created 7,100 jobs last month in addition to the 28,400 positions added in June.

Interim party leader pick draws criticism

Canada's New Democratic Party is coming under criticism for naming a former "card-carrying" Quebec separatist as its interim leader.

Nycole Turmel was a member of the independence-seeking federal Bloc Quebecois party before being elected to Parliament in May for the socialist New Democrats in Hull-Aylmer, Quebec.

Turmel, the former president of the Public Service Alliance of Canada, has temporarily replaced the New Democrats' leader, Jack Layton, as he battles a recurrence of cancer.

She was also a member of Quebec Solidaire, a provincial sovereignty movement, until the past week.

Now serving as leader of the official opposition party in the House of Commons, Turmel said she supports the two parties' policies on unions and social justice issues, but not on separation from Canada.

News in brief

• A proposed $7 billion pipeline to transport Canadian oil to Texas refineries is "incredibly important for the energy security of the United States" and will be built safely, Foreign Affairs Minister John Baird said. He told Secretary of State Hillary Rodham Clinton at a meeting in Washington there are "some legitimate concerns" over pipeline security that will be addressed. Clinton said she expected a decision on whether to proceed with the Calgary-based TransCanada project by the end of the year.

• Canada's foreign affairs department has learned that the Mexican judicial system has dropped all charges in the explosion last year that killed five Canadians at a Playa del Carmen hotel. Investigators said there was an improper extension of a natural gas line at the Grand Riviera Princess Hotel that caused the blast. A judge ruled the evidence for convictions of homicide and negligence was "not strong enough to consider that there was a crime."

Facts and figures

World economic conditions hit Canada's dollar hard during the past week as it dropped Friday to $1.0221 in U.S. funds. The U.S. greenback advanced to 97.84 cents Canadian, before bank exchange fees.

The Bank of Canada's key interest rate remains at 1 percent, while the prime lending rate is 3 percent.

Canadian stock markets are lower, with the Toronto exchange index at 12,170 points and the TSX Venture Exchange at 1,809 points.

Lotto 6-49: (Wednesday) 6, 17, 21, 28, 31 and 38; bonus 43. (July 30) 6, 7, 10, 19, 21 and 45; bonus 16. Lotto Max: (July 29) 1, 2, 3, 17, 24, 35 and 36; bonus 30.

Regional briefs

• Ruth Miriam "Babs" Asper, wife of the late Israel Asper, one of Canada's media icons, died suddenly in Winnipeg. She was 78. Israel Asper founded Canwest Global Communications. She was "an ardent supporter of the arts and education across Canada," the University of Manitoba said in a statement.

• A wagon ride in the country at a Christian children's camp near Lennoxville, Quebec, resulted in chaos when a farm tractor and trailer flipped over, resulting in injuries to 53 people, mostly children. There were "no life-threatening injuries" at the Evangelical Baptist Church camp, police said.

Jim Fox can be reached at canadareport@hotmail.com.

Canadian financial markets feel U.S. pain 08/06/11 [Last modified: Saturday, August 6, 2011 8:11pm]
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