Chinese woes punish resourCes, Commodities

The Toronto stock market closed lower Friday as disappointing economic data from China punished commodity prices and resource stocks.

The S&P/TSX composite index was off to the worst levels of the session in the wake of better than expected U.S. consumer sentiment and manufacturing data.

The index fell 48.71 points to 12,773.12 while the TSX Venture Exchange was down 13.27 points to 1,120.09.

The Canadian dollar was up US0.41¢ to US97.36¢ as Statistics Canada reported that gross domestic product grew at an annualized rate of 0.6% in the fourth quarter, which matched expectations. However, GDP actually shrank in the final month of the year, dropping 0.2%, which was also in line with economists’ forecasts.

The Dow Jones industrials came back from a triple-digit tumble to gain 35.17 points to 14,089.66, the Nasdaq was ahead 9.55 points to 3,169.74 and the S&P 500 index was up 3.52 points to 1,518.2.

Traders also considered the effect of deep U.S. government spending cuts due to take effect Friday. It’s known as the sequester and involves US$85 billion of acrossthe-board cuts.

After meeting with congressional leaders during the morning, U.S. President Barack Obama blamed Republican lawmakers for failing to stop the automatic spending cuts. Republicans said the fault was his, for insisting that increased taxes be part of the resolution.

Also in the background was the uncertainty surrounding Europe’s third-biggest economy following inconclusive elections earlier this week.

“The Italian election results set the week off on a soft tone and then the inability of the Congress and the president to come up with a more surgical solution to the sequester disappoints people, but also points to the dysfunction of the U.S. political process,” said Norman Raschkowan, North American strategist at Mackenzie Financial Corp.

There was big news on the proposed Keystone XL pipeline just before the close. T he U. S. State Depar tment says

TransCanada’s Keystone XL pipeline won’t have a significant impact on Alberta’s oilsands development, a finding that might make it easier for the White House to approve the controversial project.

The report’s findings represent the clearing of a significant hurdle for Calgarybased TransCanada in its marathon bid to win approval for Keystone XL from the Obama administration.

Prices for oil and copper registered sharp declines as government data showed that Chinese manufacturing activity expanded slower in February than January.