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Canada’s main stock index was dragged down along with U.S. markets by Chinese doubts about whether a long-term trade deal can be reached with the United States.

Rumblings by Chinese officials and a presidential tweet had investors concerned about prospects for the signing of the first phase of a comprehensive deal.

Notwithstanding the Chinese comments, U.S. President Donald Trump wrote that another venue and time is being sought to sign an initial deal after a summit in Chile was cancelled.

“Is this deal going to lead to further phases down the road as the president wants and indicated or is this thing going to fall through,” said Allan Small, senior investment adviser at HollisWealth.

Small said computer algorithms and program traders that respond to headlines contributed to the dips in stock markets and higher gold prices.

“Any time there’s uncertainty or there’s any bad news it seems like the algorithms, the program traders flock to gold and they come out of some of the more riskier trades,” he said in an interview.

“There isn’t much picking of winners or losers in this type of scenario. The program trading kind of runs wild.”

The S&P/TSX composite index closed down 18.27 points at 16,483.16, up from an intraday low of 16,409.51.

In New York, the Dow Jones industrial average was down 140.46 points at 27,046.23. The S&P 500 index was down 9.21 points at 3,037.56, while the Nasdaq composite was down 11.62 points at 8,292.36.

Markets partially recovered from intraday weakness.

Four of the 11 major sectors of the TSX were lower with Energy falling 1.77 per cent as shares of Crescent Point Energy Corp. and Encana Corp. dropped 7.3 and 6.7 per cent respectively.

Encana was down in heavy trading after announcing a move of its corporate headquarters from Calgary to the United States to bolster its access to deep-pocketed investors. The company is also changing its name to Ovintiv Inc. The energy producer announced that its third quarter profit increased to $149 million from $39 million a year ago.

The December crude contract was down 88 cents at US$54.18 per barrel and the December natural gas contract was down 5.8 cents at US$2.63 per mmBTU.

Small said Canadian stock markets tend to follow in sympathy when U.S. markets fall based on trade.

Materials prevented the TSX from dropping further as gold prices gained on the geopolitical uncertainty.

The December gold contract was up US$18.10 at US$1,514.80 an ounce and the December copper contract was down 4.8 cents at US$2.64 a pound.

Bombardier Inc. shares gained 4.4 per cent after the transportation giant announced the signing of a US$1.2-billion deal to sell its aerostructures business to Spirit AeroSystems Holdings Inc.

SNC-Lavalin Group Inc. was up nearly 21 per cent after the engineering and construction firm said adjusted profits surged 29 per cent to $218 million as it sold a stake in Highway 407 and pivots away from big, fixed-price construction contracts — where the bidder shoulders any cost overruns — towards a more stable business model that revolves around engineering services.

The Canadian dollar traded for 75.99 US compared with an average of 76.03 cents US on Wednesday.

Thursday’s trading ended a volatile month of October in which the TSX fell about one per cent while Nasdaq gained 3.7 per cent and the S&P 500 rose two per cent after setting several all-time highs.

Markets have traditionally been weak in September and pick up after Canadian Thanksgiving, but markets were stronger this September setting the stage for a strong end to the year, said Small.

“November and December historically are the best months of the year for investment so from a seasonal factor I think you could see...a bit of a rally here.”

The Canadian Press

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