The Toronto stock market dug further into negative territory for the year Thursday as traders continued to sell off stocks amid a lack of confidence lawmakers can stop the U.S. economy from going over the so-called fiscal cliff.
New data showing the eurozone has fallen back into recession further discouraged buyers.
The S&P/TSX composite index was off the worst levels of the session but still down 118.41 points to 11,811.38, a day after a 205-point tumble left the index in negative territory for the year. The TSX is down 144 points year to date.
The TSX Venture Exchange fell 35.99 points to 1,222.70.
The Canadian dollar gained 0.25¢ to US99.87¢ after the U.S. Federal Reserve indicated further quantitative easing could be on the way. This involves the U.S. central bank printing more money in order to buy up bonds.
On the economic front, Statistics Canada said manufacturing sales rose 0.4% in September to $49.8 billion, reflecting higher production in the aerospace industry and higher sales of primary metals.
U.S. markets were negative as the Dow Jones industrials stepped back 28.57 points to 12,542.38. The Nasdaq was 9.87 points lower to 2,836.94 and the S&P 500 index slipped 2.16 points to 1,353.32.
North American indexes racked up substantial losses Wednesday in the wake of a news conference by President Barack Obama, where he made it clear that higher taxes on upper income earners will have to be part of any agreement to deal with the huge U.S. deficit.
Such a scenario is bad news for a resource-heavy market like Toronto's as slowing economies in other countries will slash demand for oil and metals, putting pressure on mining and energy stocks.
Worries about the health of the global economy intensified Thursday after official figures showed that the worsening debt crisis resulted in the eurozone contracting by 0.1% in the July-to-September period from the quarter before as its economies, including those of Germany and the Netherlands, suffer from falling demand. That followed a 0.2% pullback in the previous quarter for the 17-country monetary union.
The gold sector led decliners as gold prices and stocks headed lower amid data showing global gold demand fell in the third quarter.
The energy sector was down 0.6% as the December crude contract on the New York Mercantile Exchange shed early gains and dropped 87¢ to US$85.45 a barrel on demand concerns. Canadian Natural Resources was down 37¢ to $27.37.
