TSX heads for losses at open

U.S. futures were deep in the red after the Labour Department reported Friday, while markets were closed for a holiday, that the U.S. added only 120,000 jobs last month, widely missing economist expectations for gains of about 205,000.

The Dow Jones industrial futures lost 121 points to 12,857, the Nasdaq futures dropped 27.5 points to 2,726.25 and the S&P 500 futures slid 15.7 points to 1,374.5.

The wide miss on March job creation followed three consecutive months of employment gains in excess of 200,000.

The data had been particularly surprising since the employment components in the Institute for Supply Management’s manufacturing and service sector indexes pointed to an improving labour picture, as did jobless insurance claims sliding to a four-year low recently. In addition, payroll firm ADP had forecast last week that the U.S. private sector created more than 200,000 jobs last month.

The negative start to the trading week followed five straight weeks of losses on the TSX, which has left the Toronto market up only about 1.2% year to date.

The resource-heavy TSX had run up almost 14% from the lows of last October to the most recent highs of early March. But the rally has run out of steam amid worries about growth in China and other emerging economies.

The market has also been buffeted by worries about the European debt crisis and apprehension about the upcoming first quarter corporate earnings season, which starts this week in the U.S. Traders are braced for lower earnings.

China in particular has been an important force in helping the global economy recover from the 2008 financial crisis and recession. Its fast growing economy has had a huge appetite for commodities and this has benefitted oil and metal prices and share prices of resource companies on the TSX.

But Chinese growth has slowed lately as the government deals with high inflation.

On Monday, the Chinese government reported that the country’s inflation rate edged up 3.6% in March over a year earlier. That was up from February’s 3.2% but below the government’s four per cent target for the year as Beijing shifted from containing price rises to shoring up flagging growth in the world’s second-largest economy.

Analysts expect economic growth that has declined steadily over the past year to fall to a new low of about eight per cent for the three months ending in March, down from 8.9% in the final quarter of 2011. Official data are due to be reported this week.

Demand concerns pressured oil and metal prices on Monday. The May crude contract on the New York Mercantile Exchange fell $1.66 to US$101.65 a barrel.

The May copper contract on the Nymex shed six cents to US$3.73 a pound.

Gold prices advanced as the June contract in New York gained $12.80 to US$1,642.90 an ounce.

Doubts about the durability of the U.S. recovery sent Asian stocks sharply lower.

Tokyo’s Nikkei 225 index lost 1.5%, and China’s benchmark Shanghai Composite Index declined 0.9%. Seoul shed 1.6%. Hong Kong, Sydney and Bangkok were closed for holidays.

In Europe, the Frankfurt, Paris and London markets were also closed.

In corporate news, AOL Inc. (NYSE:AOL) will get US$1.06 billion cash by selling more than 800 patents to Microsoft Corp. (Nasdaq:MSFT) following a “robust auction” of the intellectual property. AOL says it will return a “significant portion” of the proceeds to its shareholders once the deal closes.

Japanese news reports say Sony Corp. will cut about 10,000 jobs worldwide over the next year. The Nikkei business daily and other media Monday said Sony’s decision to slash six per cent of its workforce comes as it struggles with weak TV sales and swelling losses.

Quebec-based juice maker Lassonde Industries Inc. (TSX:LAS.A) has settled a long-standing legal battle over the rights to the Oasis brand name but may still face more fallout in the court of public opinion. Lassonde announced Sunday that it would compensate Deborah Kudzman, owner of the Olivia’s Oasis line of beauty products, for her legal expenses in a legal dispute that goes back years.