Source: The Canadian Press

The Toronto stock market will likely start the week negative as commodity prices step back and traders await the start of the U.S. second quarter earnings season.

The Canadian dollar rose 0.16 of a cent to 96.9 cents US.

U.S. markets also headed for a lower open as the Dow Jones industrial futures lost 30 points to 10,102, the Nasdaq futures were down 4.25 points to 1,807.25 while the S&P 500 futures declined 3.7 points to 1,068.8.

Oil prices dropped below US$76 a barrel Monday amid a strengthening U.S. dollar, while investors hope company earnings reports will supply clues about the strength of the U.S. economy.

The August crude contract on the New York Mercantile Exchange was down 25 cents to US$75.84 a barrel.

Copper prices were lower with the September contract on the Nymex down four cents to US$3.01 a pound.

Gold prices also gave up ground, losing $6.60 to US$1,203.20 an ounce.

The earnings season kicks off after the close with aluminum producer Alcoa Inc. releasing results.

J.P. Morgan and Google report on Thursday and Bank of America, Citigroup and General Electric hand in results on Friday.

Typically, Canadian quarterly earnings lag the U.S. by around three weeks.

Until last week, stocks had been sliding on signs that the global economy is not growing nearly as fast as economists and investors had hoped. The TSX ended the week up 3.34% while the Dow industrials gained 5.28% after both markets slid over 4% the previous week.

Earnings over the next few weeks will provide insight into whether sluggish U.S. retail sales, waning consumer confidence and high unemployment have actually hurt businesses’ profits.

Commodity prices backed off despite the release of robust Chinese trade figures.

China’s customs agency said over the weekend that exports were up 35% in June from a year earlier despite concerns Europe’s debt crisis could hurt trade. Exports to Europe rose 36%.

“Data for June shows China’s trade account continuing to defy gravity, with exports strong despite mounting evidence of a faltering global recovery, and imports strong despite expectations of slowing domestic investment growth,” Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates, said in a research note.

In Asia, markets were generally boosted by South Korea’s central bank upgrade to its growth forecast for 2010 to 5.9% from 5.2%.

Hong Kong’s Hang Seng added 0.4%.

But in Japan, the Nikkei 225 stock average fell 0.4% after Japanese voters handed a stinging electoral defeat to Prime Minister Naoto Kan’s party Sunday, which lost its slim majority in the upper house. The results reflect voters’ rejection of Kan’s proposal to raise taxes to lower the country’s ballooning debt and points toward policy uncertainty in the months ahead.

European bourses rose as investors focus on a meeting of eurozone finance ministers in Brussels for any comments on the bank stress tests, simulations that gauge firms’ health under various scenarios of market turmoil. The results are due later this month, but while some experts question the rigor of the tests, others underscore its importance in bringing clarity to the health of the financial sector.

London’s FTSE 100 index added 0.75%, Frankfurt’s DAX was ahead 0.2% while the Paris CAC 40 rose 0.27%.

In corporate news, Weyerhaeuser, one of the world’s largest lumber and wood products companies, is planning to distribute US$5.6 billion to shareholders through a special dividend. The dividend is a required step in Weyerhaeuser’s conversion to a real estate investment trust. Weyerhaeuser has been under pressure for years to lower its income tax rate, about 35%, by becoming a REIT. REITS often pay no corporate taxes.

Shares in BP were up 3% in pre-market trading in New York on reports the company is considering some asset sales.

The Sunday Times in London reported that BP was talking with Apache Corp. about selling 12 billion pounds (US$18 billion) in assets including a stake in Alaska’s Prudhoe Bay field. The Sunday Times also reported that ExxonMobil Corp. had approached U.S. government officials asking if they would object to a takeover bid for BP. None of the companies would comment on the reports.

BP said Monday its costs related to the Gulf of Mexico oil spill have now topped 3.5 billion euros (US$4.4 billion).

IE