Source: The Canadian Press

The Toronto stock market moved lower Thursday as oil and metal prices gave up ground in the wake of U.S. economic reports that deepened worries about economic growth for the rest of 2010.

The S&P/TSX composite index fell 70.9 points to 11,710.18 while the TSX Venture Exchange rose 3.38 points to 1,473.35.

The Canadian dollar was down 0.98 of a cent at 96.23 cents US.

Markets were already weak after new applications for unemployment insurance in the United States reached the half-million mark last week for the first time since November, a sign that American employers are cutting jobs again as the recovery slows.

Losses picked up at mid-morning after the U.S. Conference Board said its index of leading economic indicators rose 0.1% last month. The data suggests growth will be sluggish for the rest of the year, following a drop of 0.3% in June. Economists polled by Thomson Reuters had expected a gain of 0.2%.

On top of that, the Federal Reserve Bank of Philadelphia reported that its index of manufacturing activity in the Philadelphia region fell to negative 7.7 in August from 5.1 in July. This was the first negative reading in a year and surprised investors who had been expecting the index to rise to 7.0.

“Everything seems to be pointing to weaker than economists expected,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

“Most economists are revising down any indicator you want to use. Having said this, the market has been weak since April. It’s a matter of, are we going to get some encouraging news?”

There had been better news from Europe earlier in the morning, where Germany’s central bank said the economy was on course to grow by about 3% this year, much higher than the 1.9% pace that the Bundesbank had earlier forecast.

Investors have pushed stocks lower recently on signs of slowing growth in the United States, China and Japan.

Meanwhile, chipmaker Intel has a deal to buy computer-security software maker McAfee Inc. for US$7.68 billion, or US$48 per share. The per-share price represents a 60% premium over McAfee’s Wednesday close.

Intel Corp. said the deal highlights that “security is now a fundamental component of online computing.” Intel shares declined 69 cents to US$18.90.

The TSX tech sector was the leading gainer. But that was largely because of a 16.6% jump in the share price of business software company Open Text Corp. (TSX:OTC). Its shares were up $6.39 to C$44.80 after the company ended its fiscal year by more than doubling its fourth-quarter earnings to $51.5 million. Revenue was up 18% to $240 million from $203 million in 2009.

The energy component was down 0.92% as oil prices declined following the release of the U.S. data with the September crude contract on the New York Mercantile Exchange down 99 cents to US$74.43 a barrel.

Crude prices fell Wednesday after the U.S. Energy Department’s Energy Information Administration said oil supplies fell less than expected last week. Suncor Energy (TSX:SU) lost 30 cents to C$32.99 and Imperial Oil (TSX:IMO) gave back 45 cents to C$38.84.

The base metals sector was off 1.98% as the September copper contract on the Nymex lost three cents to US$3.32 a pound. Thompson Creek Metals (TSX:TCM) shed 26 cents to C$9.31, while Teck Resources (TSX:TCK.B) gave back $1.31 to C$34.65.

Financials were also weak with CIBC (TSX:CM) down 71 cents to $68.90 and Manulife Financial (TSX:MFC) off 29 cents at $12.31.

Gold stocks advanced amid rising bullion prices. The December bullion contract in New York rose $4 to US$1,235.40 an ounce. Kinross Gold Corp. (TSX:K) was up 29 cents at C$16.21.

New York’s Dow Jones industrials lost 144.33 points to 10,271.21.

The Nasdaq composite index gave back 36.75 points to 2,178.95 while the S&P 500 index fell 18.53 points to 1,075.63.

In other economic news, Statistics Canada’s composite leading index, a snapshot of future economic performance, slowed to a 0.4% increase in July, after a gain of 0.7% in June.

Statistics Canada reports most of the slowdown originated in the household sector.

The housing index continued to retreat from its recent highs, declining 4.1% as both housing starts and sales contributed to the decline.

Also, Canadian wholesale sales declined 0.3% to $43.9 billion in June. Statistics Canada reports the largest decrease came in the machinery, equipment and supplies subsector, which fell 2.3% to $8.9 billion in June.

In other earnings news, cost cutting helped Staples’ second-quarter net income rise 40% to US$129.8 million amid flat revenue as consumers and small businesses spent cautiously on office supplies. Its shares moved down 68 cents to US$18.97.

Sears Holdings Corp. cut its second-quarter loss by more than half to US$39 million as profit margins perked up at its Kmart chain. Still, weak shopper spending amid a tough economy led to a 2.8% decline in revenue at stores open at least a year and its shares fell $6.14 to US$61.11.