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At noon: TSX falls on U.S. employment data

Jobseekers queue for a job Fair in New York city on Feb. 24, 2010.

© Shannon Stapleton / Reuters/REUTERS

The Toronto stock market lost ground for a fourth session Monday after a big disappointment on U.S. job creation raised worries about the pace of the American economic recovery and sent commodity prices lower.

The S&P/TSX composite index was 70.3 points lower to 12,032.8 while the TSX Venture Exchange dipped 17.04 points to 1,464.

The commodity-sensitive loonie was down 0.48 of a cent to 100.14 cents (U.S.).

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The currency failed to benefit from a Bank of Canada survey suggesting that business optimism in Canada is rising sharply as the gloom of the winter months appears to be giving way to better expectations for sales, hiring and investment.

The quarterly survey of senior management from 100 representative firms, conducted over four weeks in February and March, found the outlook for future sales among the most positive since the recession.

New York markets were deep in the red after the U.S. Labour Department reported Friday, while markets were closed for a holiday, that the U.S. added only 120,000 jobs last month, widely missing economist expectations for gains of about 205,000.

The Dow Jones industrial index lost 151.78 points to 12,908.36.

The Nasdaq composite index dropped 37.46 points to 3,043.04 and the S&P 500 index slid 18.44 points to 1,379.64.

The wide miss on March job creation followed three consecutive months of employment gains in excess of 200,000.

The data had been particularly surprising since the employment components in the Institute for Supply Management's manufacturing and service sector indexes pointed to an improving labour picture, as did jobless insurance claims sliding to a four-year low recently. In addition, payroll firm ADP had forecast last week that the U.S. private sector created more than 200,000 jobs last month.

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The negative start to the trading week followed five straight weeks of losses on the TSX, which left the Toronto market up only about 1.2 per cent year to date.

The resource-heavy TSX had run up almost 14 per cent from the lows of last October to the most recent highs of early March. But the rally has run out of steam amid worries about growth in China and other emerging economies.

The market has also been buffeted by worries about the European debt crisis and apprehension about the upcoming first quarter corporate earnings season, which starts this week in the U.S. where traders are braced for lower earnings.

"Estimates are still being revised lower and most of the comments that you are getting from companies are more guarded," said Norman Raschkowan, North American strategist at Mackenzie Financial Corp.

"And there are two reasons: no one is really clear on how the sort of seasonal factors may have been influenced by the weather, by the fact we had such a mild winter. But also people are unclear about what the prospects really are in Europe or in Asia."

China, in particular, has been an important force in helping the global economy recover from the 2008 financial crisis and recession. Its fast growing economy has had a huge appetite for commodities and this has benefited oil and metal prices and share prices of resource companies on the TSX.

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But Chinese growth has slowed lately as the government deals with high inflation.

On Monday, the Chinese government reported that the country's inflation rate edged up to 3.6 per cent in March over a year earlier. That was up from February's 3.2 per cent but below the government's four per cent target for the year as Beijing shifted from containing price rises to shoring up flagging growth in the world's second-largest economy.

Analysts believe China's economic growth, which has declined steadily over the past year, to fall to a new low of about eight per cent for the three months ended in March, down from 8.9 per cent in the final quarter of 2011. Official data are due to be reported this week.

Demand concerns pressured oil and metal prices on Monday .

The base metals sector was off 1.44 per cent as May the copper contract on the Nymex shed eight cents to $3.71 (U.S.) a pound. Teck Resources (TSX:TCK.B) was down 73 cents to $34.33 (CAN) and Ivanhoe Mines (TSX:IVN) fell 32 cents to $13.44.

The energy sector 0.6 per cent lower with the May crude contract on the New York Mercantile Exchange down $1.85 to $101.46 (U.S.) a barrel. Cenovus Energy (TSX:CVE) gave back 34 cents to $33.99 (CAN) while Talisman Energy (TSX:TLM) lost 13 cents to $12.53.

Blue chips also gave up ground as the financial sector lost 0.86 per cent. Manulife Financial (TSX:MFC) shed 33 cents to $12.81 and Scotiabank (TSX:BNS) fell 51 cents to $54.84.

The industrial sector down 0.6 per cent with Canadian Pacific Railway (TSX:CP) off 46 cents to $74.54 and Finning International (TSX:FTT) down 59 cents to $26.35. Finning is the world's biggest dealer in Caterpillar products, which are widely used in the resource sector.

TSX losses were limited by a 1.3 per cent rise in the gold sector as bullion prices advanced $12.80 to $1,642.90 (U.S.) an ounce. Barrick Gold Corp. (TSX:ABX) ran up 61 cents to $41.12 (CAN) and Goldcorp Inc. (TSX:G) rose 41 cents to $41.01.

In corporate news, AOL Inc. (NYSE:AOL) will get $1.06-billion (U.S.) in cash by selling more than 800 patents to Microsoft Corp. (Nasdaq:MSFT) following a "robust auction" of the intellectual property. AOL says it will return a "significant portion" of the proceeds to its shareholders once the deal closes. AOL stock soared 42.5 per cent to $26.26.

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