Stocks drop for third consecutive day

Statistics Canada reported that the economy created some 82,000 jobs in March, far higher than the approximately 10,000 jobs that economists had expected.

Also, the jobless rate fell to 7.2% from 7.4% in February.

The Canadian dollar was up 0.26 of a cent to 100.62 cents US following the jobs data.

The TSX Venture Exchange fell 18.1 points to 1,481.04.

U.S. markets were generally lower as traders reduced their exposure ahead of the U.S. non-farm payrolls report for March, which is being released Good Friday morning when markets will be closed.

“There’s just not a lot of people that want to take a lot of risk at this point,” said Mark Bayko, portfolio adviser, U.S. and International Equities at RBC Dominion Securities.

“A lot of people are happy to stay on the sidelines and see what happens over the next few days.”

Economists expect job creation to come in around 210,000, which would be the fourth month in a row that the American economy has turned out more than 200,000 jobs.

Ahead of that data, the U.S. Labour Department reported Thursday that the number of people seeking U.S. unemployment benefits fell to a four-year low last week.

Weekly applications dropped 6,000 to a seasonally adjusted 357,000, the fewest since April 2008.

The Dow Jones industrials lost 14.61 points to 13,060.14. The Nasdaq composite index was up 12.41 points to 3,080.5 and the S&P 500 index slipped 0.88 of a point to 1,398.08.

The TSX and the Dow also racked up triple-digit losses Wednesday after Spanish bond yields shot up to a near three-month high in a signal that investor confidence in Spain’s finances was weakening. Spain announced tax increases and budget cuts last week.

Spain’s five-year yields climbed 19 basis points to 4.45 per cent, their highest level since January. Spain sold €2.59 billion of bonds versus an intended maximum of €3.5 billion.

Investors are concerned about the ability of the government to push through its big austerity program at a time when the Spanish economy is heading for a return to recession and unemployment is around 23%. The yield on the country’s 10-year bond pushed up a further 0.07 of a percentage point to 5.73% Thursday.

The fear among investors is that if the borrowing rate climbs too high, Spain will have to follow Greece, Portugal and Ireland and seek outside help to pay its bills. Those three countries got bailouts after their borrowing rates rose above 7%.

Countries such as Italy and Spain were faced with sharply higher bond yields late last year as investors lacked confidence in their governments to cut deficits and demanded higher premiums for rolling over debt.

The problem receded in December after the European Central Bank made large amounts of money available to eurozone banks at very low interest rates, which in turn was used to buy up government bonds in a program known as long-term refinancing operations (LTROs).

“During that time frame, a lot of the debt auctions were going reasonably well and you saw yields starting to come down as there was clearly enough demand for government debt and all signs were pointing in the right direction,” Bayko said.

However, the LTRO facility expired at the end of March.

The Spanish bond auction was “one of the first major auctions post the ECB’s LTRO and it didn’t go very well,” he said.

“All of a sudden now, the concerns are creeping back in on the European front.”

Europe has weighed on markets for most of this week after purchasing managers data indicated the eurozone is facing recession.

Buying sentiment has also chilled this week because of greatly reduced expectations that the U.S. Federal Reserve will embark on more stimulus to help the American economic recovery.

Commodity prices and resource stocks recovered some of the losses incurred this week but the gold sector was down about 1.4% even as bullion gained $16 to US$1,630.10 an ounce. Barrick Gold Corp. (TSX:ABX) faded 65 cents to $40.51 while Goldcorp Inc. (TSX:G) declined 38 cents to $40.60.

The energy sector lost 1.27% with the May crude contract up $1.84 to US$103.31 after demand concerns drove prices down almost $4 earlier this week. Suncor Energy (TSX:SU) was down 81 cents at $30.45 and Canadian Natural Resources (TSX:CNQ) fell 94 cents to $31.77.

The financial sector was down 0.4% as National Bank (TSX:NA) dropped 78 cents to $78.67 and CIBC (TSX:CM) gave back $1 to $75.40.

Tech stocks were also weak, with Open Text (TSX:OTC) down $1.41 to $59.49 and Research In Motion Ltd. (TSX:RIM) off eight cents at $12.62 after earlier hitting a fresh 52-week low of $12.53. The stock is trading at the lowest level since late 2003.

Copper was up a cent to US$3.80 a pound after sliding 13 cents on Wednesday, helping the base metals sector rise about one per cent after it sustained bruising losses the previous few days. Teck Resources (TSX:TCK.B) was up 51 cents at $35.16 and First Quantum Minerals (TSX:FM) climbed $1.31 to $19.69.

The resource-heavy TSX lost ground for a fifth week in a row, down 2.33% and led by sliding oil and mining stocks, leaving the main index up 1.23% year to date. The TSX has sharply lagged most other major indexes. The Dow industrials are up about 6.5% so far this year while the Nasdaq has charged ahead 18%.