Source: The Canadian Press

Resource stocks could pull the Toronto stock market lower on Thursday as oil prices backed off amid lacklustre European economic data.

The Canadian dollar moved 0.41 of a cent lower to 96.7 cents US.

New York futures also signalled a negative start to the session.

The Dow Jones industrial futures moved down 55 points to 10,618, the Nasdaq futures lost 11.25 points to 1,968.25 while the S&P 500 futures were off 7.5 points to 1,1122.3 after a bigger than expected decline in the monthly purchasing managers index, or PMI — a closely watched gauge of business activity.

The Markit euro-zone composite output index, which combines manufacturing and services, fell to 53.8 in September from 56.2 in August.

Particularly worrying is that the figures showed that growth in Germany, Europe’s economic powerhouse, has moderated far more rapidly than anticipated. Germany was the main driver behind the 1% quarterly growth posted in the eurozone in the second quarter of the year.

“The export-driven uptick seen in the first part of the year is coming to an abrupt halt, as the slowdown in economic activity seen outside the eurozone during the summer has started to affect the single currency area,” said Marie Diron, chief economic adviser to Ernst & Young in London.

“Eurozone GDP is set to continue to expand during the rest of the year but at a markedly slower pace than in the first half,” she added.

The November crude contract on the New York Mercantile Exchange lost 68 cents to US$74.03 a barrel.

Prices were also depressed by a stronger U.S. dollar and rising crude inventories in the U.S. which suggest demand remains weak.

Other commodity prices headed higher with December copper on the Nymex up a penny to US$3.58 a pound while December gold in New York added 20 cents to Wednesday’s record high close to US$1,292.30 an ounce.

Investors also awaited a key reading on U.S. employment. The U.S. Labour Department is expected to report first-time claims for unemployment benefits remain at a level that indicates the U.S. economy continues its sluggish growth.

Economists polled by Thomson Reuters predict claims were unchanged last week at 450,000. At that level, employers are not significantly increasing hiring or laying off large numbers of workers.

A separate report is expected to show sales of existing homes in the U.S. rose about 6% in August from a 15-year low in July. The National Association of Realtors is expected to report sales of previously occupied homes rose to an annual rate of 4.1 million in August.

European stocks fell in the wake of the disappointing PMI data with London’s FTSE 100 index down 0.74%, Frankfurt’s DAX was down 0.75%, while the Paris CAC 40 declined 1.21%.

Trading in Asia earlier was subdued as many of the major markets including Japan, mainland China, Hong Kong and South Korea were closed for holidays.

Among markets open in Asia, Australia’s benchmark stock index closed up 0.2%.

In corporate news, video rental giant Blockbuster Inc. is filing for bankruptcy protection in the United States, but its Canadian operations say they’re not affected by the reorganization. Blockbuster Canada vice president and general manager Barry Guest said in a statement early Thursday that its operations are still profitable.

McDonald’s Corp. has become the latest company to increase its dividend. The world’s biggest hamburger chain raised its dividend 11%, but its shares fell 13 cents to US$75.00 in pre-opening trading in New York.

Forests products company Canfor (TSX:CFP) has announced it will be closing its operation near Prince George, putting 185 people out of work. The company will close its Clear Lake lumber operation by Jan. 13, 2011 due to a combination of challenging markets from the ongoing downturn in new home construction in the U.S. and the lack of economic long-term fibre supply.