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Canada's main stock index turned negative shortly after the open on Friday, as the energy and financial stocks led broad declines.

The Toronto Stock Exchange's S&P/TSX composite index fell 27.29 points, or 0.18 per cent, to 15,145.43. Consumer discretionary stocks were the lone gainers among the index's 10 biggest groups.

The Dow inched up to hit a record high at the open on Friday, with the S&P 500 and Nasdaq little changed, as investors shrugged off North Korea's latest missile test and slightly tepid economic data.

The Dow Jones Industrial Average rose 31.85 points, or 0.14 per cent, to 22,235.33. The S&P 500 lost 0.18 points, or 0.007 per cent, to 2,495.44. The Nasdaq Composite added 1.57 points, or 0.02 per cent, to 6,430.66.

Pyongyang fired a second missile in as many weeks over Japan, an action that drew widespread criticism from global leaders, but barely moved shares and other risk assets.

"I think the market is kind of getting desensitized to that," said Scott Brown, chief economist at Raymond James in St. Petersburg, Fla.

"But it can always use that as an excuse in an overbought situation, to take some pressure off."

U.S. retail sales unexpectedly fell last month, following a strong reading in July, a Commerce Department report showed, suggesting a moderation in consumer spending in the quarter.

But the reading may not be very accurate indicator since the impact of Harvey could not be isolated. For instance, auto sales tumbled last month, but could get a boost from replacement of flood-damaged vehicles.

Two more reports, one on consumer sentiment and another on industrial production, are due later in the day, with investors keen to see if they will provide better clues with respect to the future path of interest rate hikes.

Wall Street ended mixed on Thursday, with the benchmark S&P 500 falling as domestic consumer prices grew at their briskest pace in seven months, increasing the odds of a third interest rate hike this year.

Federal Reserve policymakers will meet on Sept. 19-20 and are widely expected to leave rates unchanged and announce their plan to unwind the central bank's massive bond holdings.

Volatility may rise on as Friday, which marks the quadruple witching day, when investors unwind interests in futures and options contracts prior to their expiration.

In overseas markets, traders paid little attention to the latest missile test by North Korea on Friday, with shares and other risk assets barely moving, gold lower and focus rapidly returning to when and where interest rates will go up.

London, Frankfurt and Paris were a shade lower after Pyongyang fired a second missile in as many weeks over Japan , but the test had little effect on what was set to be the best week for European stocks since July.

The U.K.'s top share index fell to a four-month low on Friday, continuing to feel the pressure from a rise in sterling on its largely dollar-earning constituents with financials and commodities firms the biggest drags.

Britain's blue chip FTSE 100 index was down 1.2 per cent in early trading, on track to end the week with a second weekly loss in a row.

It fell also after several people were injured following an explosion at a London metro station, which police officers said was a "terrorist incident."

Germany's DAX was down 0.22 per cent and France's CAC was off 0.38 per cent.

MSCI's Asia-Pacific share index excluding Japan shed 0.1 percent in reaction to the North Korea missile overnight, though it was still up 0.7 percent on the week.

Japan's Nikkei gained 0.5 per cent and a more than 3 per cent jump gave it its best week since November in a directly inverse move to the yen.

"There have been reports (for a while) suggesting North Korea is preparing a missile launch, so this was by no means a surprise," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

"In a way, this seems like something markets have already experienced before, thus producing a limited reaction," he added.

Hong Kong stocks barely moved on Friday, as investors shrugged off another missile firing by North Korea, though China's weak August investment data pulled down raw material shares. The Hang Seng index rose 0.1 percent, to 27,807.59 points and the Shanghai index was down 0.05 per cent.

Commodities

Oil prices fell on Friday as global markets weakened following North Korea's latest missile launch, but crude remained close to five-month highs reached this week on bullish demand forecasts and U.S. refineries restarting.

North Korea fired a missile that flew over Japan's northern Hokkaido into the Pacific Ocean on Friday, South Korean and Japanese officials said. The action ratchets up tensions after Pyongyang's test of its most powerful nuclear bomb.

"Oil is down because of the North Korean nuclear test which is bearish for stock markets therefore oil demand can be negatively impacted," said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.

Benchmark Brent crude was down 18 cents at $55.29 a barrel, reaching a low for the day of $54.86 a barrel. But Brent was still on track for its third straight weekly gain and the highest weekly rise since the end of July.

U.S. West Texas Intermediate crude was down 16 cents at $49.73 a barrel. The contract was set for a 4.7 percent weekly gain, also its strongest in nearly two months.

Gold fell on Friday after a European Central Bank official called for scaling back the bank's stimulus program and strong U.S. inflation data raised the prospects of another rate hike.

ECB board member Sabine Lautenschlaeger on Friday made the most explicit call so far from an ECB policymaker for paring bank's 2.3 trillion euros money-printing program.

"For gold this is bad news because this continues the trend of the market pricing in the normalization of monetary policy," said Jens Pedersen, senior analyst at Danske Bank in Copenhagen.

But he said there had already been plenty of headlines about the ECB planning an exit from its bond buying and the U.S. Federal Reserve reducing its balance sheet after its big quantitative easing program.

"It's difficult to see gold really falling much further on this policy normalization agenda," he added.

Spot gold was down 0.5 per cent at $1,323.21 an ounce. It was down more than 1 per cent for the week, on track for its first weekly decline in four.

U.S. gold futures for December delivery fell 0.2 per cent to $1,327.30.

Copper prices steadied on Friday, helped by a weaker dollar, but were set for their biggest weekly fall since March as investors took profits from a speculative rally to three-year highs.

Currencies and bonds

The Canadian dollar gained slightly to stay firmly above the 82 cent (U.S.) mark.

The U.S. dollar rebounded against the yen in European trade on Friday as traders quickly brushed off the latest missile fired over Japan by North Korea, after an initial dip in risk appetite across currency markets.

The dollar dipped as low as 109.55 yen in Asian trading, but later was up more than 1 per cent above that at 110.68 yen . It was on track for its best week against the Japanese currency since November.

The 10-year U.S. Treasuries yield rose to as high as 2.225 per cent, but slipped back to 2.182 per cent in Asia on Friday following North Korea's missile launch.

The Canada 10-year bond slid to 2.08, down 0.25.

Stocks set to see action

Lumber stocks could see action today as the U.S. government is facing increasing pressure to reach a deal with Canada on softwood lumber, as demand for construction materials is expected to spike higher in Texas and Florida in the wake of hurricanes Harvey and Irma. While the U.S. lumber industry is dug in on its demand for tariffs, its customers argue that domestic supplies cannot meet their needs, which will drive up the cost of reconstruction in the states that sustained many billions of dollars in storm damage in recent weeks.

Greece granted Canada's Eldorado Gold another permit for its Olympias mining project on Friday in an attempt to defuse tension with the Vancouver-based company which had threatened to halt investment in the country. The energy ministry published on Friday the approval of Eldorado's technical study to close its old Olympias mine. A ministry official said an operating permit for a paste plant there would be granted later on Friday - the final permit required. Eldorado would be "in a position to re-assess its investment options in Greece," once it receives the required permit for the Skouries mining project, the company said in a statement. Eldorado's New York-listed shares rose 0.4 per cent in premarket trading.

Equifax Canada is facing intensifying calls for transparency on its massive cyberhack as the Canadian Automobile Association informs thousands of its members that their data may have been compromised and frustrated consumers ask questions about why they're being treated worse than their U.S. counterparts. CAA said Thursday it partnered with Equifax on its identity protection program and is notifying the roughly 10,000 members who participated that they may have had sensitive data divulged in the security breach made public last week. Equifax dropped 1.6 per cent, on track for its biggest weekly drop since July, 2001, in the aftermath of a massive data breach.

The man heading up Ontario's effort to lure Amazon to the province said Thursday that while the province would consider sensible incentives, the bid will not offer billions in subsidies to the tech giant. Providing large taxpayer subsidies to the firm wouldn't be fair to other companies that have set up shop in Ontario with little or no government assistance, said Ed Clark, who was appointed last week by Premier Kathleen Wynne to head up the Greater Toronto Region's bid to become the home of Amazon's new corporate headquarters. Amazon shares were down 0.15 per cent in premarket trading.

Oracle's shares fell 3.9 per cent in premarket trading due to the company's disappointing profit forecast and indications of a slowing cloud business.

United Continental, Spirit Airlines and American Airlines fell between 1.2 per cent and 1.5 per cent after JPMorgan downgraded all three stocks.

Carnival Corp. was down 3.39 per cent after Credit Suisse downgraded the stock to "neutral" from "outperform".

More reading: Friday's small-cap stocks to watch
More reading: Friday's Insider Report: Companies insiders are buying and selling

Economic News

Consumers cut back on their shopping in August by the largest amount in six months as a big drop in auto sales offset gains in other areas. The Commerce Department says retail sales fell 0.2 per cent after a 0.3 per cent gain in July. It was the biggest one-month decline since sales fell a similar 0.2 per cent in February. Auto sales sank 1.6 per cent in August, the biggest drop in seven months. Excluding autos, sales posted a 0.2 per cent rise last month. Demand rose at general merchandise stores, a category that includes big-box retailers such as Target. Rising gasoline prices also boosted sales. Economists had expected a weaker August sales report. But they remain confident that a healthy labour market will boost consumer spending in coming months. The Street had expected an increase of 0.1 per cent from July. Excluding automobiles, the consensus estimate is a 0.5-per-cent rise.

Statistics Canada says the amount Canadians owe compared with their disposable income climbed higher in the second quarter. The agency says household credit market debt as a proportion of household disposable income increased to 167.8 per cent, up from 166.6 per cent in the first quarter. That means for every dollar of household disposable income there was $1.68 in credit market debt. The increase came as household income increased 1.2 per cent while household credit market debt rose 1.9 per cent. Total household credit market debt, which includes consumer credit, mortgage and non-mortgage loans, totalled nearly $2.08-trillion in the second quarter. Mortgage debt increased 1.6 per cent to $1.36-trillion, while consumer credit grew 2.4 per cent to $609.6-billion.

The Canadian Real Estate Association has downgraded its sales forecast this year as national home sales slipped 9.9 per cent in August compared with a year ago. The association expects sales to decline by 5.3 per cent year-over-year to 506,900 changing hands this year, or 20,000 fewer than previously forecast in June. It projects sales in British Columbia and Ontario to fall by about 10 per cent in 2017, compared to record highs set in 2016. The association says sales in August were down in nearly two-thirds of all local markets, led by the Greater Toronto Area and nearby housing markets. However, the average price for a home sold last month was $472,247, up 3.6 per cent compared to a year ago. Excluding Greater Vancouver and Greater Toronto, the national average price was $373,859.

(8:30 a.m. ET) Canadian new motor vehicle sales for July are revealed. The estimate is a rise of 4.9 per cent year over year.
(9:15 a.m. ET) U.S. industrial production for August is announced. Consensus is an increase of 0.1 per cent from July.
(9:15 a.m. ET) U.S. capacity utilization for August is unveiled. The Street expects 76.8 per cent, up 0.1 per cent from July.

With files from Reuters and Bloomberg