Source: The Canadian Press

The Toronto stock market headed for a lower open Friday morning as commodity prices retreated amid worries of another round of monetary tightening in China that could slow the country’s economy.

The Canadian dollar was lower against the U.S. dollar, as prices for oil and metals fell back, losing 0.84 of cent from Wednesday’s close to 99.16 cents US.

U.S. futures indicated a negative start to the session amid expectations of more Chinese government measures to tighten credit and slow economic growth after inflation hit a 25-month high in October.

“There are some rumours there might be another interest rate hike this weekend,” said Linus Yip, a strategist for First Shanghai Securities in Hong Kong.

Speculation of more lending curbs send Chinese markets sharply lower with the Shanghai Composite index plunging 5.2% while the Shenzhen Composite Index for China’s smaller second exchange slumped 6.1%.

The Dow Jones futures lost 45 points to 11,197, the Nasdaq futures dropped 14.25 points to 2,158 and the S&P 500 futures fell 6.5 points to 1,205.

TSX resource stocks were likely in for early selling pressure since any moves to slow the Chinese economy have been negative for the resource-heavy Toronto stock market as heavy demand from China has helped raise prices for oil and metals, along with commodity stocks.

The December crude contract on the New York Mercantile Exchange fell $1.74 to US$86.07 a barrel.

The December copper contract in New York lost seven cents to US$3.95 a pound while the December bullion contract was down $18.60 to US$1,384.70 an ounce.

The U.S. dollar gained strength against the loonie and the euro amid mounting speculation that Ireland — one of Europe’s most financially troubled countries — would not be able to cut public spending and may have to resort to a bailout.

Traders have been dumping Ireland’s sovereign bonds on fears that new European Union rules being discussed will force investors to take on heavier losses in case of a bailout.

The debt crisis eased somewhat Friday after the finance ministers of Germany, France, Italy, Spain and Britain stressed in a joint statement that the EU’s proposed new bailout mechanism “does not apply to any outstanding debt.”

Meanwhile, leaders from the G20 countries have failed to agree on policies about trade and currency manipulation that could stoke protectionism and a trade war.

The group refused to endorse a plan the U.S. presented to force China to allow the value of its currency to rise. The U.S. argues that China is keeping the value of its currency artificially low because a weak currency makes exports cheaper.

But the U.S. position has been undermined after the Federal Reserve last week announced a plan to buy government debt in an effort to spark growth. However, that plan also weakens the value of the dollar, which could eventually help its own exports.

Elsewhere in Asia, Japan’s benchmark Nikkei 225 stock index ended down 1.4% while Hong Kong’s Hang Seng fell 1.7%.

London’s FTSE 100 index dipped 0.23%, Frankfurt’s DAX was off 0.03% while the Paris CAC 40 lost 1.15%.

In earnings news, auto parts company Linamar Corp. (TSX:LNR) said Thursday it earned $21 million in its latest quarter as sales grew by nearly a third. Canada’s second-biggest auto parts maker said the profit amounted to 32 cents per share for the quarter ended Sept. 30 compared with a loss of $500,000 a year ago when the company took $1.6 million in one-time charges.