Source: The Canadian Press

The Toronto stock market headed for a negative open on Tuesday as a stronger U.S. dollar and further efforts to slow the Chinese economy pushed commodity prices lower.

The moves in the greenback pressured the Canadian dollar ahead of the Bank of Canada’s latest announcement on interest rates, falling 1.13 cents to 97.48 cents US.

U.S. futures signalled a lower open despite strong earnings from Apple Inc. and IBM Corp. after the close Monday with the Dow Jones industrial futures down 27 points to 11,018, the Nasdaq futures shed 26.25 points to 2,068 while the S&P 500 futures declined 6.6 points to 1,172.

Most economists expect the Bank of Canada will pause on raising rates after lifting them three times to this year. Its key rate now stands at 1%.

However, there was some surprise in markets after the People’s Bank of China raised its one-year lending rate 0.25% to 5.56%, and its one-year deposit rate by 0.25% to 2.5%.

“This is a little unexpected given that officials had already been making steady moves to cool property speculation and excessive lending for various industries,” said BMO Capital Markets economist Carl Campus.

“Clearly, there is worry that the economy needs another jolt of tighter policy to slow growth.”

Tuesday’s announcement came as Beijing tries to cool rising inflation.

The greenback clawed back ground after U.S. Treasury Secretary Timothy Geithner sought to downplay fears that China and the U.S. are heading towards a currency war, saying that no country “can devalue its way to prosperity.”

Those comments to business leaders in Silicon Valley in California helped support the dollar.

“Geithner’s promise not to pursue dollar devaluation provided quite pronounced relief for the currency,” said Daragh Maher, deputy head of global foreign exchange strategy at Credit Agricole.

The dollar had weakened considerably in recent weeks as speculation grew the U.S. Federal Reserve will embark on a quantitative easing, designed to increase liquidity. The move would involve the central bank in buying government bonds, which increases the supply of dollars and weakens the currency.

Oil and metal prices were down sharply in the wake of Geithner’s announcement and the Chinese rate hike with the November crude contract on the Nymex down $1.19 to US$81.89 a barrel.

The December bullion contract on the New York Mercantile Exchange fell $15.50 to US$1,356.60 an ounce while the December copper contract in New York lost seven cents to US$3.78 a pound.

A strong Chinese economy has helped lift the global economy from the depths of recession and been particularly beneficial to commodity prices and oil and mining companies on the resource heavy TSX.

On the earnings front, Monday’s after-hours earnings from Apple Inc. and IBM Corp. weighed on sentiment. Apple reported a 70% rise in global sales in the July-September quarter but cautioned that fourth quarter profit will jump less than analysts expected. And though IBM said its net income rose 12%, investors were concerned that new contracts have fallen for a third straight quarter. IBM stock was down 3.42% in premarket trading while Apple fell 5%.

Apple’s earnings report also affected rival Research in Motion Ltd. (TSX:RIM). The BlackBerry maker’s shares were off 2.25% in premarket trading in New York.

On Tuesday, Bank of America Corp. reported a surprise loss Tuesday because of a one-time charge tied to credit and debit card reform legislation passed this year. Shares rose slightly as the bank’s operating results easily beat forecasts.

Earlier, Japan’s benchmark Nikkei 225 stock index gained 0.4%, South Korea’s Kospi slipped 1.0% while Australia’s S&P/ASX 200 rose 0.1%.

Elsewhere, Hong Kong’s Hang Seng index rose 1.1% and the Shanghai Composite Index jumped 1.6%.

London’s FTSE 100 index declined 0.36%, Frankfurt’s DAX dipped 0.18% while the Paris CAC 40 was off 0.4%.

In other corporate news, food producer Premium Brands Holdings Corp. (TSX:PBH) says it has reached an agreement to acquire Seattle-based SK Food Group Inc. for $42.5 million. The Vancouver-based company said Monday the acquisition of SK Food Group, a manufacturer of artisan breakfast sandwiches and wraps, fits “perfectly” with its core strategies.

Constellation Software Inc. (TSX:CSU) says it has acquired the health clinical business of GFI Business Solutions Inc. for an undisclosed price. The deal expands Constellation’s business in Quebec.