Toronto stocks closed lower on Friday on concerns that lower than expected inflation numbers for June could signal an economic slowdown. The Toronto Stock Exchange's key S&P/TSX composite index closed down 47.17 points, or 0.4 percent, at 11,418.33. The fall was limited by a rally in financial stocks, which ended 0.6 percent higher on the inflation figures.
Statistics Canada reported on Friday that the consumer price index fell to 2.5 percent in June from 2.8 percent in May, which seemed to vindicate the Bank of Canada's decision to call off its interest-rate-hiking drive.
Toronto Dominion Bank rose 64 Canadian cents, or 1.1 percent, to C$58. Canadian Imperial Bank of Commerce gained 85 Canadian cents, or 1.1 percent, to C$77.91.
Overall, half of the TSX index's 10 main groups ended down, with the industrial sector falling 1.8 percent just a day after one of its key companies, Canadian National Railway Co, reported a strong second-quarter profit.
"It's fears over what may happen to the global economies," Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier in Toronto. "It's like the bogeyman. People are afraid of what could happen, so rather than waiting to see what will happen, they're taking action now by selling these stocks despite the fact CN Rail had very good earnings and they announced the share buyback."
Canadian National Railway Co fell C$1.57, or 3.3 percent, to C$45.88. Canadian Pacific Railway Ltd fell C$2.08, or almost 4 percent, to C$51.42.
Shares of gold producers fell 1.9 percent as bullion lost almost 2 percent in New York trading. Barrick Gold lost 39 Canadian cents, or 1.2 percent, to C$32.11. Goldcorp dropped 72 Canadian cents, or 2.3 percent, to C$30.55.
Base-metal miners shares dropped 1.3 percent after Inco Ltd agreed with Teck Cominco Ltd, which has made a hostile bid to take over Inco, to lift its "poison pill". Shares of Teck Cominco fell C$2.24, or 3.3 percent, to C$65.71. Inco closed up 70 Canadian cents, or 0.9 percent, to C$81.45 on continued speculation that a higher take-over bid will emerge.
Energy shares, which make up about a third of the S&P/TSX composite, fell 0.9 percent despite a modest rise in oil prices after Israel called up reservists, signalling no end was near in its conflict with Hizbollah.
Market volume was 205.5 million shares worth C$4.5 billion. Decliners outpaced advancers 821 to 598. The blue chip S&P/TSX 60 index closed 2.14 points lower, or 0.3 percent, at 647.25.
Technology stocks slipped 0.7 percent, mirroring a similar slide on US markets following a profit warning from personal computer maker Dell Inc Nortel Networks lost 3 percent to close at C$2.21, while Research In Motion dropped 2.5 percent to close at C$70.99.
"The Intel and the Dell numbers were pretty lacklustre," said Gavin Graham, chief investment officer at Guardian Group of Funds, in Toronto. "Weakness in technology spilling over here."
The Dow Jones industrial average fell 59.72 points, or 0.55 percent, to close at 10,868.38. The Nasdaq market sank 19.03 points, or 0.93 percent, to 2,020.39, its lowest close in 14 months. The S&P 500 slid 8.84 points, or 0.71 percent, to 1,240.29.