Toronto stocks seen undercut by U.S. jobs report

Fri Apr 4, 2008 9:02am EDT
 
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TORONTO, April 4 (Reuters) - The Toronto Stock Exchange's main index was set to drop on Friday, and snap a four-day win streak, as news that U.S. employers slashed 80,000 jobs last month cast a dark shadow over global equities.

Although economists expected U.S. job losses in March, the number surpassed expectations and accounts for the biggest monthly decline in five years. For details, see: [nN03475545]

It means that the United States, Canada's biggest trading partner, is headed into a downturn, and that the profits of export-oriented TSX firms will take a hit.

"It will confirm the worries and the negative mood in the market," said Beste Alpargun, vice-president of equity research at Citadel Securities in Halifax.

Meanwhile, Canada's employment growth eased in March after big gains in the previous two months. The country added 14,600 jobs, boosting its unemployment rate to 6.0 percent. For details, see: [nN04340691]

The Canadian benchmark has managed to outperform major U.S. stock indexes and averages this year due in large part to the country's key resource sector, which has helped shield the economy from a slowdown in the United States.

But European equities and U.S. stock futures tumbled after the U.S. payroll report, a menacing sign for the TSX.

Elsewhere, Teck Cominco TCKb.TO confirmed it had agreed to the terms of a contract for zinc treatment charges with major smelter Korea Zinc Co 010130.KS. Although the Canadian zinc-and-copper miner did not provide details of the terms, the contract sets the global tone for this year's treatment-charge contracts. See: [nSP124850]

Corel Corp CRE.TO, the consumer software maker that is the target of a buyout by its majority shareholder, will also be on radars after it reported a modest first-quarter loss. See: [nN03478122]

The S&P/TSX composite index .GSPTSE starts the day at 13,633.44 after advancing 37.15 points, or 0.3 percent, in the previous session. The index has risen more than 6 percent in two weeks, gaining ground in eight of the last nine trading days.

($1=$1.01 Canadian) (Reporting by Jonathan Spicer; Editing by Scott Anderson)