SLOWDOWN FEARS TAKE TOL ON TSX

Disappointing manufacturing data from Europe and China set the tone for North American markets on Thursday, sending commodity prices lower as investors’ fears of a global economic slowdown were reignited.

Canada’s benchmark stock index fell for the third of four sessions this week, closing at 12,361.81, a drop of 74.68 points, or 0.60%. Eight of the 10 subindexes declined, led by energy, which dropped 1.32%, and materials, down 1.05%.

The price of crude oil dropped sharply on Thursday, falling US$1.92 to US$105.35 a barrel. Gold, normally a safe haven for investors in troubled times, also lost ground. It fell US$7.80 to US$1,642.50.

The Canadian dollar fell 75 basis points to US$1.0003.

Canada’s j unior Venture exchange dropped 36.81 points, or 2.33%, to 1,540.75.

“The correlation between commodities and the Canadian market is very high,” Danielle Park, a money manager at Venable Park Investment Counsel Inc. in Barrie, Ont., told Bloomberg. “This is not only because we’re fairly overweight in that sector, but also because of this whole perception of Chinese demand fuelling commodity-based countries.”

Energy and raw-materials companies make up 46% of Canadian stocks by market value, according to Bloomberg data.

“China’s recently announced l ower growth target for the next five years (7.5%) caused some consternation i n global markets. Recent data, including monthly surveys of purchasing managers, also show that China’s manufacturing sector has slowed,” wrote BMO Capital Markets economist Christy Chen in an afternoon commentary, suggesting that the slowing likely reflects the country’s “structural shift” from exports to consumption.

“Although this shift may entail significant challenges for the manufacturing sector and the global markets it influences, this structural re-balancing of the secondlargest economy is positive for the longterm health of the global economy.”

Another report Thursday showed manufacturing output shrinking in Germany and France where growth had been expected.

The overseas data weighed on U.S. markets despite some good economic news there, i ncluding data showing initial jobless claims for the previous week at their lowest level since March 2008. The Dow Jones industrial average lost 78.48 points, or 0.60%, closing at 13,046.14, while the Nasdaq fell 12.00 points, or 0.39%, to 3,063.32.