The Toronto stock market was lower Friday while commodity prices lost ground on nagging worries about the fragile global economic recovery.
The S&P/TSX composite index declined 35.78 points to 11,629.92 while the TSX Venture Exchange was up 2.16 points to 1,193.03.
The Canadian dollar lost 0.41 of a cent to 98.82 cents (U.S.) after the loonie closed at a two-month high on Thursday.
Traders also took in data showing Canada's annual inflation rate rose 0.3 of a percentage point to 1.5 per cent in June, from 1.2 per cent the previous month. On a month-to-month basis, the consumer price index fell 0.4 per cent from May.
The increase in the annual rate was mostly attributed to base-effects to June 2010, when gas prices were receding and the cost of new automobiles fell by over three per cent.
U.S. markets were lower amid a mixed bag of corporate earnings from heavyweights including Microsoft Corp., General Electric and Xerox.
The Dow Jones industrials lost 84.23 points to 12,859.13. The Nasdaq composite index dropped 15.75 points to 2,950.15 and the S&P 500 index declined 8.47 points to 1,368.04. The TSX energy sector was off almost one per cent as oil prices slipped after rising Mideast tensions sent crude up by almost $3 on Thursday.
The August crude contract on the New York Mercantile Exchange fell $1.31 to $91.35 a barrel. Canadian Natural Resources was down 37 cents to $28.61.
Crude rose about five per cent last week as the oil market responded to a series of events that have raised concerns that Iran will try to block oil shipments through the Strait of Hormuz, a narrow waterway in the Persian Gulf through which one-fifth of the world's oil travels every day.
The base metals sector gave back 1.4 per cent with metals also lower with copper down eight cents to $3.45 a pound. First Quantum Minerals gave back 31 cents to $17.97.
The tech sector was also a weight while CGI Group shed 26 cents to $24.07.
The gold sector led advancers, up 0.36 per cent while bullion fell $3.70 to $1,576.70 an ounce. Barrick Gold Corp. rose 27 cents to $35.35.
On the earnings front, General Electric reported Friday that its quarterly net income fell 16 per cent to $3.11 or 29 cents a share because of losses in businesses it has divested and an increase in pension costs. Excluding pension costs and losses from discontinued businesses, GE earned 38 cents, a penny better than analysts were expecting. It also reaffirmed its outlook.
GE also said that it plans to split its energy business into three separate operations.
GE is viewed as an important economic bellwether since its businesses range from appliances to financial services to wind and gas turbines. Its stock dipped four cents to $19.80.
Microsoft said Thursday that an accounting adjustment to reflect a weak online ad business led to its first quarterly loss in its 26 years as a public company. Microsoft racked up a $492-million loss in the April-June quarter while revenue rose four per cent to $18.06-billion. Ex-items, the company earned 73 cents a share, a dime better than forecasts and its shares were up 26.5 cents to $30.93.
But shares in Xerox Corp. cut its full-year profit forecast as the provider of printers and business services said that second-quarter net income fell 3.1 per cent to $309-million or 22 cents a share, missing forecasts by four cents. Revenue dropped 1.3 per cent to $5.54-billion, against expectations of $5.61-billion. Xerox added that third quarter profits will also miss estimates. Xerox shares dropped 13.5 cents to $7.055.
The TSX appeared heading for an overall gain for this week on rising expectations that central banks will step up to ensure the economic recovery stays on the rails.
Earlier this week, Federal Reserve chairman Ben Bernanke appeared before Congressional panels and while he did not indicate that another round of stimulus was imminent, his comments led investors to believe further action remained an option. The Fed has already completed two programs of asset purchases, which have the effect of increasing the supply of money.
Other central banks have embarked on more stimulus in recent weeks by cutting rates, including those in South Korea, the European Union, and China.
There was another reminder Friday how China, the world's second biggest economy, is slowing as a result of government efforts to choke off high inflation.
The government says total profit for its biggest state-owned companies is down sharply.
The state Xinhua News Agency said Friday the agency that oversees the top 117 state companies reported first-half profit was down 16.4 per cent from a year earlier. It gave no details of individual companies.
China's economic growth slowed to a three-year low of 7.6 per cent in the second quarter. Analysts say the decline probably has bottomed out but they say the strength of a recovery is uncertain.
The risk-on sentiment grew as the yield on Spain's benchmark 10-year bond ran up to 7.05 per cent on Friday, from 6.98 per cent the previous day. A rate of seven per cent and above is widely considered too expensive for the Spanish government to pay for more than a few months.
Yields rose even as finance ministers from the 17 euro countries approved a bailout for Spanish banks.
But investors fear that the Spanish government could in the meantime face new costs helping its banks and could eventually need rescue loans itself.
European indexes were solidly in the red as London's FTSE 100 index lost 0.72 per cent, Frankfurt's DAX dropped 0.97 per cent while the Paris CAC 40 lost 1.63 per cent.