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At the open: TSX falls, Telus weighs after profit miss

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014

Mark Blinc/Reuter

Canada's main stock index fell in early trading on Friday, weighed by heavyweight mining and financial stocks as well as telecom company Telus Corp, which lost ground after reporting a smaller-than-expected profit.

The Toronto Stock Exchange's S&P/TSX composite index was down 43.94 points, or 0.29 per cent, to 15,030.31 shortly after the open. It is on track for a 1.5-per-cent decline in the holiday-shortened week.

Telus was down over 2 per cent in early trading.

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U.S. stock indexes opened slightly higher on Friday after data showed tepid inflation that could lead the Federal Reserve to hold off from raising rates this year, even as investors remained cautious over heightened tensions between the United States and North Korea.

The Dow Jones Industrial Average rose 38.28 points, or 0.18 per cent, to 21,882.29. The S&P 500 gained 2.36 points, or 0.09 per cent, to 2,440.57. The Nasdaq Composite added 9.97 points, or 0.16 per cent, to 6,226.84.

U.S. President Donald Trump, in his latest warning to North Korea, said military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".

The tensions, since Mr. Trump made his "fire and fury" comments on Tuesday, have wiped out nearly $1-trillion from the global equity markets.

"The escalation of the geopolitical situation between the U.S. and North Korea is beginning to rattle investors' nerves as was witnessed in the VIX index yesterday," said Peter Cardillo, chief market economist at First Standard Financial.

"The overall 'Fear Factor' is the markets worst enemy that will feed on itself, leading to increased hedging."

On Thursday, the CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the U.S. presidential election.

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Helping offset the geopolitical tensions was weaker-than-expected consumer price data for July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

The Labor Department said its Consumer Price Index edged up 0.1 per cent last month, which was below the 0.2-per-cent rise expected by economists polled by Reuters.

The data comes amid tepid inflation that has remained below the Fed's 2-per- cent target, despite low unemployment.

Oil prices fell on Friday after the International Energy Agency said weak OPEC compliance with production cuts was prolonging a rebalancing of the market despite strong demand growth.

Brent crude, the global benchmark, was at $51.83 a barrel, down 7 cents, having earlier fallen 50 cents or around 1 percent to its lowest since Aug. 1.

U.S. West Texas Intermediate crude was down 10 cents at $48.49 per barrel, having earlier dropped 1 percent to its lowest since July 26.

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Oil touched 2-1/2-month highs on Thursday but closed down around 1.5 percent, with U.S. prices slipping back below $50 amid oversupply concerns.

"There would be more confidence that rebalancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve," the IEA said in its monthly report.

The IEA said OPEC's compliance with the cuts in July had fallen to 75 percent, the lowest since those curbs began in January. It cited weak compliance by Algeria, Iraq and the United Arab Emirates.

In addition, OPEC member Libya, which is exempt from the cuts, steeply increased output.

"Crude oil prices failed to hold recent gains, with a nervous market starting to doubt recent falls in inventories," ANZ bank said in a note. "Supply-side issues also weighed on prices."

The IEA also said it had revised historic demand data for 2015-2016, meaning a lower demand base in 2017-2018 combined with unchanged high supply numbers could lead to lower stock draws than initially anticipated.

Saudi Arabian Energy Minister Khalid al-Falih said the kingdom did not rule out additional oil production cuts, the Saudi-owned Al Sharq Al Awsat newspaper reported.

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