Source: The Canadian Press

The Toronto stock market looked set to open lower with fears about the state of a global economic recovery front and centre after Japan delivered a major disappointment.

The Canadian dollar moved down 0.17 of a cent to 95.85 cents US.

U.S. futures also pointed to a lower open as 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 was way lower than expectations for a 0.6% increase.

The Dow Jones industrial futures declined 32 points to 10,234, the Nasdaq futures slipped 3.25 points to 1,812 while the S&P 500 futures were down 4.2 points to 1,071.9.

The Japanese data comes on the heels of a negative showing on markets last week after the U.S. Federal Reserve confirmed what many investors already suspected — that “the pace of recovery in output and employment has slowed in recent months.”

Also, Chinese data showed economic growth slowing to 10.3% in the second quarter from 11.9% in the first quarter, as Beijing removed stimulus measures in recognition that the world’s No. 3 economy quickly exited from an economic downturn.

The TSX fell 2.3% last week while the Dow industrials lost just over 3%.

Commodity prices were higher with the September crude contract on the New York Mercantile Exchange moved ahead 13 cents to US$75.52 a barrel.

The September copper contract in New York was two cents higher to US$3.27 a pound while the December gold contract moved up $7.70 to US$1,224.30 an ounce.

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

U.S. home-improvement retailer Lowe’s Cos. said Monday its profit rose 10% in the second quarter to US$832 million. But it said it doesn’t expect sustained sales improvement until the economy recovers and cut its revenue outlook. Chairman and CEO Robert Niblock says there won’t be consistent improvement in demand until the labour and housing markets improve.

In overseas trading, Japan’s benchmark Nikkei 225 stock average ended down 0.6%, China’s Shanghai Composite Index was up 2.1% amid hopes credit tightening policies will be eased and Hong Kong’s Hang Seng added 0.2%.

London’s FTSE 100 index declined 0.38%, the Frankfurt DAX was down 0.35% and the Paris CAC 40 fell 0.87%.

Meanwhile, it’s a light week for economic data.

In the U.S., the Federal Reserve Bank of New York is expected to say Monday that the manufacturing activity in the state rebounded this month after the pace of growth slowed sharply in July.

Economists polled by Thomson Reuters predict the Empire State Manufacturing index rose to eight from 5.08 in July.

Investors will get the latest reading on the Canadian manufacturing sector on Tuesday when Statistics Canada releases manufacturing shipments data for June. And on Friday, the latest reading on inflation comes out. The Consumer Price Index is expected to be up 0.8% in July from June.

In the U.S., investors will also get the July reading on housing starts on Tuesday. The housing sector has been weak with starts tumbling 19% since the home buyers tax credit ended in April.