Source: The Canadian Press

The Toronto stock market headed for a negative session on Friday as commodity prices fell sharply after China moved again to slow down its economy to rein in inflation.

Falling prices for oil, copper and gold helped push the Canadian dollar lower against the American currency, down 0.73 of a cent to 100.32 cents US.

U.S. futures were lower despite strong earnings reports from banking and tech bellwethers with the Dow Jones futures down 53 points to 11,630, the Nasdaq futures lost 2.75 points to 2,300 and the S&P 500 futures fell 5.3 points to 1,276.

China’s central bank has raised the amount of money banks must keep on reserve for the seventh time in a year.

It has ordered state-owned banks to set aside an additional 0.5% of deposits as reserves, effective Jan. 20. Reserves vary by institution but could be close to 20% for the biggest commercial lenders.

China’s inflation rate jumped to a 28-month high of 5.1% in November.

Investors have usually reacted negatively to these Chinese moves to slow the economy since strong demand from that country and other emerging markets was largely responsible for the resource-heavy TSX gaining 14% during 2010.

Oil prices retreated with the February contract on the New York Mercantile Exchange down 82 cents to US$90.58 a barrel.

Gold stocks will likely feel the effect of sharply lower bullion prices with the February contract on the Nymex down $23.10 to US$1,363.90 an ounce.

The March copper contract in New York was off a penny to US$4.36 a pound.

Overseas, Japan’s Nikkei 225 stock average closed down 0.9% after Prime Minister Naoto Kan’s cabinet resigned en masse and a new government was put in place in a bid to revive the economy.

South Korea’s Kospi rose 0.9%, the third time this week that it has reached a record high.

Australia’s S&P/ASX 200 gained 0.1%.

The benchmark Shanghai Composite Index fell 1.3% while the Shenzhen Composite Index of China’s smaller, second exchange tumbled nearly 2%.

London’s FTSE 100 index was down 0.74% and the Frankfurt DAX lost 0.51%.

The Paris CAC 40 declined 0.37% as French Finance Minister Christine Lagarde says she and her counterparts in the eurozone are discussing changes to the currency union’s bailout fund for countries that run into financial trouble, including increasing its size.

European finance ministers will meet in Brussels Monday and Tuesday.

On the corporate front, Baytex Energy Corp. (TSX:BTE) has agreed to purchase heavy oil assets in northern Alberta and western Saskatchewan. The assets, worth $156.5 million, are being acquired through the a corporate acquisition of a private company and an asset acquisition.

CanElson Drilling Inc. (TSXV:CDI) will acquire eight rigs in the Bakken area of southeast Saskatchewan under a proposed agreement to buy Eagle Drilling Services Ltd. The deal is valued at $78 million, including $17.1 million of assumed debt. Eagle Drilling shareholders will receive $20 million in cash and $41 million of CanElson shares at a deemed price of $4.15 per share.

J.P. Morgan Chase says its fourth-quarter profit jumped 47% to US$4.83 billion or US$1.12 a share as the company was able to set aside less money to cover loan losses. Analysts surveyed had forecast the bank would earn US$1 per share.

Intel Corp.’s fourth quarter net income jumped 48% to US$3.39 billion or 59 cents a share mainly on strong demand from corporations. The results beat expectations of 53 cents a share.