Source: The Canadian Press

The Toronto stock market was in for a lower open on Tuesday as commodity prices fell on indications that rapid expansion of the Chinese economy is slowing.

The Canadian dollar declined 0.68 of a cent to 96.72 cents US.

U.S. futures also pointed to a negative start to the trading day as investors look to a mid-afternoon announcement on interest rates from the Federal Reserve.

The Dow Jones industrial futures backed off 70 points to 10,596, the Nasdaq futures dropped 9.25 points to 1,904.5 while the S&P 500 futures were down 8.3 points to 1,117.3.

Concerns about demand from China grew after figures showed that while the country’s exports grew strongly in July, import growth fell. Imports rose by 22.7% in the year to July against 34.1% in the year to June and expectations for an increase of 30%.

“The drop in imports might affect those countries that supply China with raw materials,” said economist Xing Ziqiang of China International Capital Corp.

Chinese demand has been one of the reasons why the global economy largely recovered from recession, but China’s monetary authorities worry about potential inflationary pressures in the economy and are putting the brakes on, particularly in the property market.

The strong Chinese growth has been particularly beneficial to commodity prices and in turn to oil and mining companies on the resource heavy Toronto stock market.

Oil and metal prices retreated in the wake of the report with the September crude contract on the New York Mercantile Exchange down $1.46 to US$80.02 a barrel.

The September copper contract in New York dropped seven cents to US$3.29 a pound while the December gold contract lost $6 to US$1,196.60 an ounce.

Meanwhile, the Fed will make its scheduled announcement on interest rates at mid-afternoon. The central bank is widely expected to leave rates unchanged near zero for quite a while yet.

But a run of worse than expected U.S. economic data, culminating in a poor jobs report for July, has ratcheted up expectations that the Fed will have to turn to stimulus measures to get the recovery going again.

However, announcing such measures could be problematic, suggested Daragh Maher, an analyst at Credit Agricole.

“We believe that the Fed might be nervous that such a move would be over-interpreted as a sign of deep concern about the health of the economy, with adverse implications for economic and market confidence,” Maher said.

“Instead, they are likely to leave policy unchanged … and merely indicate a willingness to act as dictated by the data.”

Earlier, Chinese stocks led the retreat in Asia and Shanghai’s benchmark index ended 2.9% lower, the Nikkei 225 stock average closed down 0.2% while Hong Kong’s Hang Seng retreated 1.5%.

London’s FTSE 100 index was down 0.44%, Frankfurt’s DAX was up 0.69% while the Paris CAC 40 advanced 0.87%.

On the corporate front, Saudi Arabia’s telecommunications regulator on Tuesday said it would allow BlackBerry services to continue in the kingdom, citing “positive developments” with manufacturer Research In Motion Ltd. (TSX:RIM). The Communications and Information Technology Commission’s announcement staves off, at least for now, a potential ban of BlackBerry Messenger service in the country _ a step which officials had said was possible because of national security concerns.

PetroBakken Energy Ltd. (TSX:PBN), a 58% owned subsidiary of Petrobank Energy and Resources Ltd. (TSX:PBG), reports its second quarter loss widened to $15.4 million from $31,000 a year earlier. Revenues at the Calgary company soared 140% to nearly $246 million from $102.5 million.