Source: The Canadian Press

The Toronto stock market headed for a lower open Tuesday as commodity prices fell back amid renewed worries over Europe’s government debt crisis.

The Canadian dollar moved down 0.39 of a cent to 96.86 cents US.

U.S. futures were flat as investors look to a key report on consumer confidence in the U.S. being released later in the morning.

The Dow Jones industrial futures were ahead nine points to 10,759, the Nasdaq futures gained seven points to 2,014.25 while the S&P 500 futures added 0.6 of a point to 1,138.3.

Investors continued to be cautious amid a renewed bout of concern over Europe’s government debt crisis after Moody’s Investor Services cut its rating on Anglo Irish Bank Corp. by three notches.

Unconfirmed market rumours say that Moody’s is also preparing a downgrade of Spain’s debt was also weighing on markets.

“Sovereign debt worries are once again adding to traders’ woes with the threat of a credit downgrade for Spain by Moody’s,” said Ben Critchley, sales trader at IG Index in London.

“This together with the profit taking ahead of the month and quarter end could lead to a broad-based sell-off that could leave markets in a state of limbo for some time yet,” he added.

The new round of concern raised questions about demand for crude, helping push the November oil contract on the New York Mercantile Exchange down 62 cents to US$75.90 a barrel.

Traders also awaited the latest U.S. supply figures for clues about the strength of demand for crude.

Inventories likely rose 2.2 million barrels last week, according to analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

Metal prices also weakened as the December copper contract on the Nymex shed two cents to US$3.58 a pound.

Gold prices also backed off from Monday’s latest record close, down $8.50 to US$1,290.10 an ounce. Gold has closed at a series of record highs during September as investors look for a hedge against fears of inflation and U.S. currency weakness.

Later in the morning, the U.S. Conference Board is expected to say American consumer confidence dipped slightly this month compared with August.

Economists polled by Thomson Reuters forecast the consumer confidence index dipped to 52.5 from 53.5 last month. It takes a reading of 90 to indicate a strong, healthy economy.

Also weakening sentiment Tuesday was a report in the Wall Street Journal saying that the U.S. Federal Reserve may not announce massive bond purchases with a finite end as it did in 2009 but instead opt for a smaller-scale program that can be adjusted as the recovery unfolds. The Fed’s next meeting is in early November.

One of the reasons why stocks have been relatively buoyant of late is the expectation that the Fed would commit to another big package of measures to shock the financial system back into life.

The prospect of a bigger pool of dollars in the system had been supporting shares while simultaneously hitting the dollar.

Meanwhile, Research in Motion Ltd. (TSX:RIM) (NASDAQ:RIMM) will be in focus after the BlackBerry maker showed off its new PlayBook tablet for the first time Monday and is set to launch the device early in 2011. Its stock was up about 0.5% in pre-market trading in New York.

Earlier in Asia, Japan’s Nikkei 225 stock average slid 1.1% with exporters hurt by the yen’s sustained strength.

Investors are closely monitoring the Japanese currency, which authorities may try to weaken again soon after the Japanese central bank earlier this month bought dollars to weaken the yen for the first time in six years. The Nikkei financial daily reported that the central bank will discuss further monetary easing when it meets next week.

South Korea’s Kospi lost 0.3%, Hong Kong’s Hang Seng retreated 1% and he Shanghai Composite Index fell 0.6%.

London’s FTSE 100 index was off 0.29%, Frankfurt’s DAX rose 0.13% while the Paris CAC 40 index ticked up 0.05%.

In other corporate news, Nexen Inc. (TSX:NXY) said Monday that its Appomattox project in the Gulf of Mexico has more than 250 million barrels of oil equivalent. The company made the estimate of the deep water project after drilling an exploration well and two appraisal sidetracks.

Drug developer Endo Pharmaceuticals Holdings Inc. said Tuesday it is buying Qualitest Pharmaceuticals for US$1.2 billion in a move to diversify its business and strengthen its position in the generic and pain drug markets.

Toyota Motor Corp., the world’s biggest automaker, is getting into the minicar market. The company said Tuesday that it would expand its product line to include minivehicles made by subsidiary Daihatsu Motor Co. starting in stages from autumn 2011 in Japan.