Toronto stocks to head lower

U.S. futures were deep in the red as American markets prepare to shut for the Thanksgiving Day holiday on Thursday. The Dow Jones industrial futures were down 81 points to 11,366, the Nasdaq futures fell 14.5 points to 2,199.8 and the S&P 500 futures lost 8.6 points to 1,174.2.

Pessimism about economic prospects deepened after a manufacturing survey from HSBC indicated that China’s industrial sector is slowing. Its main manufacturing gauge fell to 48 in November from 51 in October — its sharpest fall since March 2009. Any reading below 50 indicates contraction from the previous month.

China has been one of the few bright spots since the economic crisis of 2008 sent global economies into a slump and its strong economic growth has helped support higher commodity prices, which in turn have boosted resource stocks on the resource-heavy TSX.

There was also further grim news from Europe, where a worsening government debt crisis has raised fears about the future of the euro itself and pushed the region to the brink of recession.

A closely watched survey from financial information company Markit showed the eurozone contracted for the third month running in November and that the deteriorating economic picture is not just confined to debt-stressed countries such as Greece.

Although its monthly composite purchasing managers index rose to 47.2 in November from 46.5, it remains below the 50 mark, the threshold between expansion and contraction.

Markit said Wednesday’s survey suggests that eurozone is contracting at a quarterly rate of 0.6% in the fourth quarter and that the problems are increasingly spreading to Europe’s two biggest economies, Germany and France.

Also, eurozone industrial orders collapsed by a massive 6.4% in September from the previous month. Though this data is historically volatile the figures provide further uncomfortable reading for politicians battling to get a grip on the debt crisis.

Analysts said the figures are likely to pile the pressure on the European Central Bank to cut interest rates again, possibly as soon as next month. In November, it reversed recent policy, cutting its benchmark interest rate by a quarter of a percentage point to 1.25% amid mounting worries over the state of the eurozone economy.

The euro unsurprisingly took a battering in the wake of the figures, sending investors to the safe haven status of U.S. Treasuries.

Worries about lower demand and the higher U.S. dollar pushed oil prices down more than US$2 a barrel.

A stronger greenback usually helps depress oil prices, which are denominated in dollars, as it makes oil more expensive for holders of other currencies.

The January contract for crude on the New York Mercantile Exchange lost $2.08 to US$95.93 a barrel.

Metals also sold off with the December copper contract on the Nymex down nine cents to US$3.24 a pound.

Bullion prices also retreated while the December gold contract in New York lost $12.50 to US$1,689.90 an ounce.

European markets were mainly lower as London’s FTSE 100 index lost 0.58%, Frankfurt’s DAX was up 0.2% and the Paris CAC 40 declined 0.37%.

In earnings news, Deere & Co. said strong demand for its farm equipment helped boost the company’s fourth quarter profit by 46% to US$670 million. The company also said next year should be better because it expects demand will remain robust. Deere’s revenue grew 20% to $8.6 billion from last year’s $7.2 billion.

Elsewhere, Nokia Siemens Networks said it will cut 17,000 jobs worldwide by 2013 as it strives to cut costs by C1 billion.

The Finnish-German company says it will launch “an extensive global restructuring program” by streamlining and other measures, including a large reduction in suppliers.

Minmetals Resources Ltd. has extended the deadline for its $1.3-billion takeover offer to shareholders of Anvil Mining Ltd. (TSX:AVM). The Minmetals offer of C$8 per Anvil share in cash will now be open until 8 p.m. ET on Dec. 9, about two weeks after the previous deadline of Nov. 24.