Source: The Canadian Press

The Toronto stock market closed lower Thursday as falling energy prices and stocks overshadowed data showing continued strong growth in China.

The S&P/TSX composite index lost 50.69 points to 12,599.23, also held back by falling gold stocks, while the TSX Venture Exchange was down 10.45 points at 1,860.85.

The Canadian dollar lost early gains amid a strengthening American currency, down 0.39 of a cent at 97.44 cents US after rising almost a cent Wednesday.

China’s rapid growth slowed to a still strong 9.6% in the third quarter from the year before. That was down from 10.3% in the previous quarter but still modestly higher than expectations. There was also relief that inflationary pressures remained fairly benign.

“The key takeaway is that things are still very healthy in China — economic growth continues to be very strong,” said Jennifer Dowty, portfolio manager at MFC Global Investment Management, who noted that other Chinese data was also solid.

“Retail sales as well were in line in China, the Producer Price Index was in line,” Dowty said. “…Industrial production was slightly below expectations, 13.3% growth year over year, but still very robust.”

Hopes that a slowing economy will not dent demand too badly had earlier pushed copper prices higher, but those gains disappeared as the U.S. dollar strengthened against a basket of currencies. The December copper contract on the New York Mercantile Exchange was down one cent at US$3.78 a pound, but the base metals sector managed a 0.26% gain as Quadra FNX Mining (TSX:QUX) lost 17 cents to C$14.86 and Thompson Creek Metals Co. Inc. (TSX:TCM) fell 48 cents to $10.85.

However, Lundin Mining (TSX:LUN) was up 65 cents at $6.31 on heavy volume of 19 million shares, making it the most active issue on the TSX.

The rise came as Scotia Capital said the company should enjoy sharply higher quarterly earnings “due mainly to its high sensitivity to copper prices, which increased 24% over the quarter.”

The December crude contract in New York dropped $1.98 to US$80.56 a barrel, giving back Wednesday’s similar-size gain when a report showed that commercial crude inventories rose less than analysts expected last week. However, a surprise 1.2-million-barrel jump in gasoline supplies dismayed traders.

The energy sector fell 0.62% with Suncor Energy (TSX:SU) down 60 cents at C$33.66, while Talisman Energy (TSX:TLM) rose 40 cents to C$18.47.

Elsewhere in the sector, Precision Drilling Corp. (TSX:PD) shares gained 18 cents to $7.70 even as third-quarter profits slipped to $61 million as it booked a lower foreign exchange gain. Canada’s largest independent oil and gas driller said earnings were equal to 21 cents per share, which was ahead of analyst estimates of nine cents per share, according to Thomson Reuters. Revenues increased to $359 million from $253 million.

Gold stocks also weighed on the TSX as the December gold contract on the Nymex slipped $18.60 to US$1,325.60 an ounce. Kinross Gold (TSX:K) faded 63 cents to C$17.96 and Goldcorp Inc. (TSX:G) lost 49 cents to $42.92.

Shares in PotashCorp (TSX:POT) were little changed, up 78 cents to $146.68, after Saskatchewan Premier Brad Wall said he won’t support the hostile takeover of the fertilizer giant by international mining company BHP Billiton. Wall said the US$38.6-billion takeover isn’t of net benefit to Canada no matter how you look at it.

BHP Billiton told shareholders Thursday that it will not be caught up in a bidding war for PotashCorp and won’t overpay to acquire the Canadian company.

New York markets racked up modest gains as U.S. corporate earnings continued to largely beat forecasts. In particular, investors looked at Caterpillar’s results to get an insight into the state of the construction sector.

Strong sales growth in developing countries pushed Caterpillar’s third-quarter earnings 96% higher to US$792 million or $1.22 a share, easily beating expectations of $1.09. The world’s largest maker of mining and construction equipment boosted its outlook for 2010 and predicted more growth next year. But its shares dipped 99 cents to US$78.89.

“It’s buying on anticipation, selling on the strength, which has me a little cautious,” added Dowty.

United Parcel Service Inc. stock was also slightly lower, down six cents at US$69.59, even as profit rose and the company raised its full-year outlook.

Some of the pullback could simply have been investors taking profits. Caterpillar hit a high for the year early in the morning before pulling back. United Parcel also retreated after coming within US$1 of hitting its high for the year.

New York’s Dow Jones industrial average gained 38.6 points to 11,146.57.

The Nasdaq composite index was up 2.28 points at 2,459.67, while the S&P 500 index was 2.09 points higher at 1,180.26.

The U.S. Labour Department said first-time claims for unemployment benefits fell last week. But the decline was essentially offset by a surprisingly sharp upward revision to the previous week’s claims. First-time claims remain stuck at levels that indicate companies are not hiring many workers, even though they aren’t cutting many jobs either.

In Canada, the composite leading index, an indicator of future economic growth, edged down 0.1% in September, its first decline since April 2009.

In other corporate news, Bombardier Inc. (TSX:BBD.B) shares ran up five cents to $5.12 on heavy volume of 15.6 million shares as it announced it’s taking advantage of favourable conditions on the debt markets to redeem about $1 billion worth of outstanding notes. It will pay for the transaction by issuing about $1 billion of new notes, denominated in euros, that will expire in 2021.