Source: The Canadian Press

The Toronto stock market headed for a lower open Wednesday as oil prices fell back despite data showing a larger than forecast drop in U.S. oil consumption and investors took some profits following the sharp gains netted in 2010.

The Canadian dollar dropped 0.24 of a cent to 99.91 cents US as the U.S. dollar continued to strengthen against other currencies in the wake of upbeat economic data.

U.S. futures pointed to a lower open with the Dow Jones futures down 34 points to 11,585, the Nasdaq futures lost 4.75 points to 2,240.75 and the S&P 500 futures were 3.6 points lower to 1,261.7.

Futures came off early lows after payroll company ADP forecast that the American economy created 297,000 jobs during December.

The data was released two days before U.S. nonfarm payrolls report for December.

It is expected the U.S. economy created about 150,000 jobs during December while the jobless rate edged down 0.1% to 9.7%.

American markets started the new year off strong following a much better than expected reading of the Institute for Supply Management’s manufacturing index for December. Later in the morning, investors will take in the ISM non-manufacturing index, which is expected to show a slightly faster pace of expansion during last month. Economists expect the index to come in at 55.3 following a 55 reading for November.

The TSX ended 2010 up about 14% but faltered Tuesday, the first trading day of the year, as oil, copper and gold all racked up substantial declines.

Oil prices fell for a second day with the February contract on the New York Mercantile Exchange down 70 cents to US$88.68 a barrel.

The American Petroleum Institute said late Tuesday that crude inventories fell 7.5 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast a drop of 1.6 million barrels.

Crude supplies have fallen for five weeks, but are still above levels from the previous year. The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.

Metals also headed lower as the March copper contract on the Nymex shed five cents to US$4.32 a pound while the February bullion contract in New York lost $5 to US$1,373.80 an ounce.

Overseas, China’s benchmark Shanghai Composite Index declined 0.5% while Hong Kong’s Hang Seng Index lost 0.4%.

Japan’s Nikkei 225 stock average ended down 0.2%, South Korea’s Kospi fell 0.1% and Australia’s S&P/ASX 200 lost 0.6%.

London’s FTSE 100 index dropped 0.6%, Frankfurt’s DAX 30 declined 1.64% while the Paris CAC 40 was 1.35% lower.

Elsewhere, there was relief that debt-laden Portugal managed to raise 500 million euros via the auction of six-month Treasury bills and that demand for the offering was relatively high at over 1.3 billion euros. However, Portugal had to pay a whopping interest rate of just under 3.7% to get the necessary backing, way up on the 2% it had to pay in September.

In corporate news, Qualcomm Inc., the developer of chips and other technology for cellphones, says it has agreed to buy chip maker Atheros Communications Inc. for US$3.2 billion in cash. Qualcomm will pay US$45 per share for Atheros, a premium of 22% over Atheros’ closing share price Monday, the last trading day before The New York Times reported the potential deal.

Canadian nuclear medicine specialist Nordion Inc. (TSX:NDN) has extended a contract with one of its primary customers to supply Molybdenum-99, used to make isotopes for nuclear medicine procedures. Nordion, formerly part of MDS Inc. before it was split up, said its contract with Lantheus Medical Imaging Inc. will now last until Dec. 31, 2013, while the original was in place until July 31, 2011.