Source: The Canadian Press

The Toronto stock market headed for a lower open Thursday as commodity prices deteriorated in the wake of data showing a worsening employment situation in the U.S.

The Canadian dollar was down 0.16 of a cent to 97.05 cents US.

U.S. futures reversed course after new applications for unemployment insurance reached the half-million mark last week for the first time since November, a sign that employers are cutting jobs again as the recovery slows.

The Dow Jones industrial futures were down 24 points to 10,328, the Nasdaq futures fell three points to 1,833.75 while the S&P 500 futures were off by 2.7 points to 1,084.

The U.S. Labour Department reported that initial claims for jobless benefits rose by 12,000 last week to 500,000, the fourth increase in the past five weeks. Economists forecast that claims would drop.

Futures had earlier headed higher following a sharply revised growth estimate from Europe’s biggest economy.

Germany’s central bank said the economy is on course to grow by about 3% this year, much higher than the 1.9% pace that the Bundesbank had earlier forecast.

The report was good news to investors who have pushed stocks lower recently on signs of slowing growth in the United States, China and Japan.

Oil prices headed lower following the release of the U.S. employment data with the September crude contract on the New York Mercantile Exchange down 27 cents to US$75.15 a barrel.

Crude prices fell Wednesday after the U.S. Energy Department’s Energy Information Administration said that oil supplies fell less than expected last week.

The September copper contract on the Nymex gained a penny to US$3.36 a pound while December bullion contract in New York rose $3.50 to US$1,234.90 an ounce.

Investors also took in major dealmaking in the tech sector.

Chip maker Intel is buying computer-security software maker McAfee Inc. for US$7.68 billion, or US$48 per share. The per-share price represents a 60% premium over McAfee’s Wednesday close.

Intel Corp. said the deal highlights “that security is now a fundamental component of online computing.”

On the economic calendar, Statistics Canada’s composite leading index, a snapshot of future economic performance, slowed to a 0.4% increase in July, after a gain of 0.7% in June.

Statistics Canada reports most of the slowdown originated in the household sector, where three components fell.

The housing index continued to retreat from its recent highs, declining 4.1% as both housing starts and sales contributed to the decline.

U.S. investors will take in the Conference Board’s gauge of future economic activity. Its index of leading economic indicators likely rose by 0.2% in July after falling a month earlier.

Also, a report on regional manufacturing activity from the Federal Reserve Bank of Philadelphia is expected to show an increase, following a similar report from the New York Fed. Economists expect the Philly Fed survey to rise to seven in August from 5.1 last month. Any reading above zero indicates growth in the sector.

In earnings news, cost cutting helped Staples’ second-quarter net income rise 40% to US$129.8 million amid flat revenue as consumers and small businesses spent cautiously on office supplies

Sears Holdings Corp. cut its second-quarter loss by more than half to US$39 million as profit margins perked up at its Kmart chain. Still, weak shopper spending amid a tough economy led to a 2.8% decline in revenue at stores open at least a year.

The TSX finished higher Wednesday, up 52 points as PotashCorp (TSX:POT) shares ran ahead on expectations of an improved takeover offer from Australian resource giant BHP Billiton. Other companies in the base metals sector gained ground amid hopes that more resource companies will be snapped up with big share price premiums.

A positive earnings report from retailer Target helped push New York higher with the Dow Jones ahead 10 points.

Earlier in Asia on Thursday, most stock markets ended the session modestly higher. Japan’s Nikkei 225 stock average was the standout, closing 1.3%, higher.

There’s growing market speculation that the Bank of Japan is examining fresh measures to boost liquidity, that could rein in the appreciation of the yen, which has been a major concern for many of Japan’s export-dependent businesses.

Figures earlier this week showed that Japan’s economy barely grew in the second quarter, allowing China to overtake its neighbour as the world’s second-largest economy, behind the United States.

The fear is that economic conditions will get even worse as a result of the recent rise in the yen.

The Shanghai Composite Index added 0.8% and Hong Kong’s Hang Seng index rose 0.2%.

London’s FTSE100 index added 0.11%, Frankfurt’s DAX rose 0.41% while the Paris CAC 40 is down 0.72%.