Toronto stocks set to fall after warnings on U.S.

Thu Feb 7, 2008 9:08am EST
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TORONTO Feb 7 (Reuters) - The Toronto Stock Exchange's main index was set to decline on Thursday morning, extending a late-day slide in the previous session after warnings from U.S. corporations over the state of the U.S. economy.

Investors will also evaluate a mixed bag of results from Canadian firms Loblaw L.TO, Air Canada ACa.TOACb.TO, and Thomson TOC.TO as fourth-quarter earnings season rolls along.

But the focus will likely be on the United States, Canada's key trade partner, where network equipment-maker Cisco Systems CSCO.O warned of slowing orders, casting a shadow over TSX technology stocks.

"Cisco is in a position to know what is happening throughout the economy, and they're making a judgment that things will be weak throughout the system," said Douglas Davis, president at Davis-Rea.

"I think the market would sell off on that kind of news."

Worries over a slowing U.S. economy have dominated movement on the Toronto index over the last couple of months. On Thursday, Wal-Mart WMT.N reported disappointing January sales, further eroding confidence in the economy.

The S&P/TSX composite index .GSPTSE is down about 7 percent so far this year.

TSX retailers could be dragged lower along with Loblaw, Canada's biggest grocer, whose earnings missed expectations amid price cutting that is intended to fend off growing competition from Wal-Mart. For details, see: [nN06305429]

Elsewhere, Air Canada, the country's top airline, reported a higher fourth-quarter profit, while earnings at electronic publishing firm Thomson jumped 11 percent. See: [nN07230586] and [nN07355997]   Continued...