Source: The Canadian Press

The Toronto stock market racked up a modest gain Monday despite data from Japan that showed economic growth slowing considerably in the second quarter.

The S&P/TSX composite index climbed 24.51 points to 11,552.76, thanks in large part to rising gold stocks, while the TSX Venture Exchange ticked ahead 0.11 of a point to 1,457.16.

The Canadian dollar moved down 0.29 of a cent to 95.73 cents US.

Worries about the strength of the economic recovery again arose after government figures showed that Japan’s economy grew by only 0.1% in the second quarter from the previous three-month period, largely because domestic demand fell.

The tepid growth was a sharp drop from the 1.2% expansion recorded in the first quarter and way lower than the 0.6% increase that had been expected.

The showing also means Japan lost its place as the world’s No. 2 economy to China in the second quarter.

Buying sentiment was also muted by another report Monday which showed manufacturing activity in New York rebounded slightly this month after declining sharply in July.

The Federal Reserve Bank of New York’s Empire State Manufacturing Index rose to 7.1 in August from 5.1 in July. Economists polled by Thomson Reuters had forecast the index would rise to eight. The index was as high as 19.6 just two months ago.

The tech sector was a weight on the TSX as shares in Research In Motion (TSX:RIM) continued to suffer amid threats by a number of countries — including India, Saudi Arabia and the United Arab Emirates — to cut off BlackBerry services unless they get greater access to user data. RIM stock fell another $2.57 or 4.62% to $53.02 amid a report it had agreed to provide Indian security agencies with partial access to its instant messaging service.

Its stock is down about 10% this month as investors also focus on other problems facing the company.

“We had thought, for example, that they were going to benefit from the overall strong demand for smartphones,” said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

“However, they’ve actually been losing market share in the consumer business and we downgraded them 10 days or so ago from a buy to a hold because we see the growth rate as not being as strong as we had anticipated.”

Commodity prices were mixed, with the September crude contract on the New York Mercantile Exchange down 15 cents at US$75.24 a barrel after crude backed off about 7% last week on demand worries. Still, the energy group was ahead 0.31% Monday on the TSX and Canadian Natural Resources (TSX:CNQ) gained 43 cents to C$33.90.

The base metals sector lost 0.18% even as the September copper contract in New York moved three cents higher to US$3.28 a pound. HudBay Minerals (TSX:HBM) advanced 48 cents to C$13.73 while Quadra FNX Mining (TSX:QUX) fell 26 cents to C$10.27.

The gold sector was the strongest group, as the December gold contract closed up $9.60 to US$1,226.20 an ounce. Barrick Gold Corp. (TSX:ABX) ran ahead 81 cents to C$45.59 while Goldcorp Inc. (TSX:G) improved by 90 cents to C$42.25.

The financial sector was little changed as two of Canada’s major banks said they will reduce many of their posted mortgage rates by one-tenth of a percentage point. The posted five-year closed mortgage rate, for instance, will fall to 5.49% annually at RBC Royal Bank (TSX:RY) and BMO Bank of Montreal (TSX:BMO).

Economic worries pushed the TSX down about 2% and the Dow industrials down about 3% last week, which some analysts called an overreaction.

“The reality actually isn’t as bad as people are thinking, or were thinking at the end of last week,” Warne said.

“As economies come out of recession, the first couple of quarters are very strong and then things settle into a longer term expansion phase. And we’re going through that and this is the same thing that happens every time and people are acting like it’s all different, but it isn’t.”

New York’s Dow Jones industrial average was off 1.14 points to 10,302.01.

The Nasdaq composite index gained 8.39 points to 2,181.87 while the S&P 500 index inched up 0.13 of a point to 1,079.38.

In other corporate news, Canadian fertilizer company Agrium Inc. (TSX:AGU) said it is looking to buy Australian grain marketer AWB Ltd. in a deal worth A$1.24 billion or C$1.14 billion. Agrium shares declined $1.26 to $68.81.

And Magna International shares (TSX:MG.A) moved six cents higher to $79.64 a day before an Ontario court is expected to rule on a controversial plan to pay Magna International’s founder a hefty premium to give up voting control of the company.

Magna’s shareholders have already approved the plan but some shareholders have opposed the transaction because of the huge premium Frank Stronach will receive and the dilution to Magna’s common shares that will result.