Source: The Canadian Press

The Toronto stock market headed for a lower open on Thursday despite rising commodity prices amid worries that the Chinese government may have to take further measures to slow the economy to deal with high inflation.

Investors were also cautious amid fears that Ireland will have to get a financial bailout to stave off bankruptcy while the leaders of the Group of 20 industrial and developing countries sat down to discuss how to shore up the global economic recovery.

The Canadian dollar moved lower on international markets with banks and the Bank of Canada closed because of Remembrance Day. The currency was down 0.32 of a cent to 99.68 cents US a day after closing at parity with the U.S. dollar for the first time since mid-April.

U.S. futures were also lower with the Dow Jones industrial futures down 43 points to 11,259. The Nasdaq futures fell 14.5 points to 2,160, pushed lower by a disappointing outlook from Cisco Systems Inc. while the S&P 500 futures lost six points to 1,208.

The falling greenback helped send the December crude contract on the New York Mercantile exchange up 12 cents to US$87.93.

The December copper contract in New York was ahead four cents to US$4.04 a pound while gold gained $9.10 to US$1,408.40 an ounce.

The rise in commodity prices came amid data from the Chinese government that a jump in food costs drove China’s inflation to a 25-month high in October despite government efforts to cool living costs. The 4.4% inflation rate was far above the official target of 3% and raised the possibility it might impose new controls that could further slow economic growth.

The data was released a day after the Chinese central bank ordered banks to raise loan reserves in a bid to curb lending in order to lower inflation.

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.

Other data showed that growth in factory output and retail sales also eased in October, though both still rose at double-digit rates over a year earlier.

Ireland is at the epicenter of concerns that the government will not be able to get a handle on its massive debts and will instead have to get a Greek-style financial bailout from its partners in the eurozone and possibly the International Monetary Fund.

That view is increasingly evident in the bond markets, where interest rates on Irish government bonds have been rising on an almost daily basis to their highest levels since the euro was introduced in 1999. On Thursday, the yield on ten-year bonds approached 9% for the first time and the spread between the benchmark German rate spiked towards 7%.

G20 leaders are meeting today and Friday to discuss a number of key issues crucial for the future of the global economy and their meeting comes amid ongoing tensions in the currency markets, fears of a rising tide of protectionism and big divergences in trade positions.

Expectations are fairly low that the leaders will come up with any significant agreement, especially on what many leaders consider to be the main source of tension in the foreign exchange markets — the Chinese monetary authorities’ reluctance to allow their currency, the yuan, to appreciate faster against the dollar.

At the same time, emerging economies, including China, have voiced concerns about the Federal Reserve’s decision last week to pump another US$600 billion into the U.S. economy, arguing that the move is an indirect attempt to weaken the dollar.

In corporate news, for the second straight quarter Cisco provided investors with a disappointing sales forecast that has driven its shares sharply lower in pre-opening trading. Cisco shares fell 12% in pre-market trading.

The computer network equipment maker said its revenue will rise by less than half of what analysts’ had predicted for its November through January quarter.

Tim Hortons earned $73.8 million in the third quarter or 42 cents per share — up more than 20% from $61.2 million or 34 cents per share in the same period last year.

But analysts had been expecting 53 cents per share or $92.71 million of net income, according to figures compiled by Thomson Reuters.

The iconic Canadian restaurant operator is also closing 36 U.S. stores.

Elsewhere in Asia, Hong Kong’s Hang Seng added 0.8% while Australia’s S&P/ASX 200 rose 0.6%.

Chinese shares closed mixed even after credit ratings agency Moody’s Investors Services upgraded its view on China.

The benchmark Shanghai Composite Index rose 1%.

London’s FTSE 100 index was off 0.23%, Frankfurt’s DAX dipped 0.1% while the Paris CAC 40 declined 0.4%.