Source: The Canadian Press

The Toronto stock market closed sharply lower Tuesday, with a daylong slide accelerating late in the session as a weak projection for U.S. growth outweighed moderately positive Canadian data.

The S&P/TSX composite index lost 135.26 points to close at 12,793.75, led by falling energy and mining stocks. The TSX Venture Exchange dropped 12.53 points to 2,001.52.

The Canadian dollar was off 0.54 of a cent at 97.74 cents US.

Investors seeking a safe haven put money in gold and the U.S. dollar amid global uncertainty over Ireland’s debt crisis, mounting tensions between North and South Korea and a weaker projection for U.S. growth.

Commodities were also pushed lower after China took further steps Tuesday to curb inflation by banning the hoarding of oil, coal and other key commodities in an effort to cool prices.

The December gold contract on the New York Mercantile Exchange gained $19.80 to US$1,377.60 an ounce. Barrick Gold Corp. (TSX:ABX) added 87 cents to C$51.95.

Meanwhile, the January crude contract on the Nymex lost 49 cents to US$81.25 a barrel and the energy sector fell 1.6%. Shares in Suncor Energy Inc. (TSX:SU) were 94 cents lower at C$33.95.

The December copper contract on the Nymex slipped five cents to US$3.70 a pound. The base metals sector was down 2.9% with Teck Resources (TSX:TCK.B) off $2.09 at C$48.82.

Market sentiment, already bruised by negative economic and geopolitical news from Europe and Asia, was further battered after the U.S. Federal Reserve lowered its forecast for growth into next year.

“With so many growing uncertainties out there, it appears that the balance of risks has shifted to the downside with a lot of positive developments already priced in and the potential for negative developments and disappointments spreading,” said Colin Cieszynski, a market analyst at CMC Markets Canada.

Canadian investors also weighed in on reports Tuesday that found consumer prices rose more than expected in October, while retail sales grew in September but less than economists had anticipated.

Together, the reports paint a modestly positive picture of the Canadian economy and could influence the Bank of Canada’s decision next month on whether to raise interest rates.

“They’re both consistent with moderate economic growth, but still positive economic growth,” said Nathan Janzen, an economist at RBC.

“They’re consistent with GDP growth starting to pick up in the fourth quarter to something a little bit above trend in Canada.”

Retail sales increased for the fourth straight month in September, rising 0.6% in current dollars to $36.4 billion. Eight of 11 subsectors reported gains.

“It shows still decent momentum and at least a good sign of consumer spending going into the fourth quarter,” Janzen said.

Meanwhile, Statistics Canada found that Canada’s annual inflation rate jumped half a point to 2.4% last month as the cost of gasoline, cars, shelter and food all rose. The increase brings the country’s annual inflation rate to the highest it’s been in two years.

Janzen said the TSX likely moved lower as a response to concerns about the external recovery.

U.S. markets moved even further into the red as investors reacted to a slate of negative economic news.

On Wall Street, the Dow Jones industrial average was down 142 points at 11,036. The Nasdaq composite index lost 37 points to 2,495 and the S&P 500 index fell 17 points to 1,181.

Fed officials said in an updated forecast that the U.S. economy will grow only 2.4% to 2.5% this year, down sharply from a previous projection of three to 3.5%. Next year, the U.S. economy is expected to expand by three to 3.6%, also down from its previous forecast of 3.5% to 4.2%.

The darker view helped to explain why the Fed decided at its Nov. 2-3 meeting to launch another round of stimulus. The central bank plans to buy $600 billion in Treasury bonds over the next eight months in an effort to lower interest rates and spur more spending.

A separate report found the American economy grew at 2.5% in the summer period, besting the 2% growth estimated last month, but still not enough to significantly reduce the U.S. unemployment rate or to prevent a slide into deflation.

Meanwhile, the U.S. National Association of Realtors said sales of previously owned homes slipped 2.2% in October as the housing market continued to battle tough economic conditions including high unemployment and tight credit.

The fallout from a major insider trading investigation involving hedge funds and other parties continues to weigh on market sentiment in the United States.

Investors were also uneasy Tuesday about the economy in Europe after Ireland accepted a massive bailout. Experts said the bailout, which is expected to amount to around euro90 billion (US$123 billion), has done little to shield other heavily indebted countries from a potential collapse in investor confidence.

Market sentiment was hit further by the news that North Korea bombarded the South Korean island of Yeonpyeong, near their disputed western border, setting buildings ablaze and killing at least two marines, according to South Korean officials.

Insurers Manulife Financial (TSX: MFC), down 50 cents at $14.38, and Sun Life Financial Inc. (TSX: SLF), off 67 cents at $27.95, led a 1.3% decline in the financial sector.

Sun Life said at an investors day that it expects significant growth opportunities for its business in China and India where insurance coverage is generally low and the middle classes are rapidly expanding.

Shares in Maple Leaf Foods (TSX:MFI) were halted just before market close to announce that the Ontario Teachers Pension Plan Board is selling about 21 million common shares of Maple Leaf Foods to a syndicate of underwriters, who have agreed to pay $10.50 per share or $220.5 million in total. The sale will reduce OTPP’s stake in the company to 9.9% from the current 25.2%.

Alimentation Couche-Tard (TSX:ATD.B) said it would boost its dividend by 25% after the convenience store operator’s net earnings grew nearly 20% to US$105.6 million in the late summer quarter. Shares in Couche-Tard closed up 68 cents at $25.95.

George Weston Ltd. (TSX:WN) reported third-quarter profits rose to $184 million, or $1.31 per share, compared with $86 million or 56 cents per share a year earlier. Sales increased to $9.9 billion from $9.8 billion. Shares in the company were down 90 cents at $77.

Norwegian oil giant Statoil announced plans to sell a 40% stake in its Canadian oilsands holdings to Thailand’s PTT Exploration and Production for US$2.28 billion. Statoil entered the oilsands in 2007, when it acquired North American Oil Sands Corp.