TORONTO - Financial and energy stocks led a negative session on the Toronto stock market mid-afternoon as the rising tide of unemployment claimed another half a million jobs last month.
Toronto's S&P/TSX composite index was off earlier lows as losses in the mining sector moderated but was still down 68.5 points to 9,153.1.
The Dow Jones industrial average fell 73.9 points to 8,668.5.
But bad as the 524,000 job cuts were, there was some degree of relief that it wasn't worse -- many traders had expected losses in the neighbourhood of 800,000 jobs.
"Over 500,000 is still a very, very ugly number particularly when you should be seeing some part-timers being put to work for Christmas," said Blair Falconer, portfolio manager at HSBC Securities Canada.
"And Canada was no better -- Canada was just as bad and the unemployment rate here jumped by three tenths which was quite worrisome. We're pretty much confirmed as being in recession in Canada as well."
Statistics Canada reported the economy lost 34,400 jobs last month pushing the unemployment rate to 6.6 per cent from 6.3 per cent in November.
"With economic contractions in the cards over the first half of 2009, expect the unemployment rate to head towards eight per cent before coming back down as the economy stages a recovery in the latter part of the year," said Krishen Rangasamy at CIBC World Markets.
The Canadian dollar moved down 0.8 cent to 84.05 cents US as Statistics Canada reported that the value of building permits dropped 11.8 per cent in November to $4.8 billion.
It was the third double-digit decrease for building permits in four months.
And Canada Mortgage and Housing Corp. reported that housing starts during December were little changed from the previous month.
CMHC said that the seasonally adjusted annual rate of starts came in at just over 177,000, down marginally from 178,000 units in November.
The TSX Venture Exchange was up 1.97 points to 901.44.
New York's Nasdaq composite index was down 27.85 points to 1,589.16 and the S&P 500 dipped 10.95 points to 898.5 as the U.S. unemployment rate increased two tenths of a point to 7.2 per cent, the highest since early 1993.
The U.S. Labour department also said job losses in the previous two months were greater than thought, with an additional 154,000 cuts during October and November.
About 2.6 million Americans lost their jobs during 2008.
Some analysts suggested that the relatively mild reaction to the latest job statistics is that North American stock markets have already "discounted a depression."
"That's why no matter how severe the recent non-farm payroll losses are, the stock market soon shrugs it off," said Jeff Rubin, CIBC World Markets chief economist and chief strategist."
Rubin said the trillions of dollars being pumped into the world's largest economies, coupled with deep interest rate cuts, will likely cause markets to rally in the last half of the year.
The TSX energy sector was down 1.8 per cent as the February crude contract on the New York Mercantile Exchange dropped $1.30 to US$40.40 a barrel. EnCana Corp. (TSX:ECA) fell 92 cents to $57.18 and Suncor Inc. (TSX:SU) gave back 73 cents to $28.09.
U.S. energy giant Chevron Corp. warned its fourth-quarter earnings will be "significantly lower" than the third quarter because of the steep drop in energy prices and narrowing refining margins. At the same time, the firm was upgraded to overweight from neutral at J.P. Morgan and its shares dipped 53 cents to US$73.71.
The financial sector eased 1.4 per cent as Royal Bank (TSX:RY) fell back 78 cents to $36.92 and CIBC (TSX:CM) declined $1.80 to $52.46.
The base metals sector declined 1.8 per cent with Teck Cominco Ltd. (TSX:TCK.B) down 29 cents to $7.13.
Shares in HudBay Minerals Inc. (TSX:HBM) were 22 cents higher to $3.86 after it said Friday it will shut down its Chisel North zinc mine and concentrator in Snow Lake, Man. due to low metals prices and the slumping global economy.
Industrial stocks were also a weight as economic pessimism pressured railway stocks. Canadian National Railways (TSX:CNR) fell $1.11 to $46.05 and Canadian Pacific (TSX:CP) declined 98 cents to $42.46.
Meanwhile, provisions of General Motors' and Chrysler's US$17.4-billion in federal loans automatically places them in default if union workers go on strike.
The UAW and the automakers have a Feb. 17 deadline to agree to concessions to lower labour costs.
The president of the Canadian Auto Workers says his union won't accept such a ban.
Schlumberger Ltd., the world's biggest oilfield services company, has announced a five per cent reduction of its North American workforce along with job cuts internationally.
The move comes as other major oil field services companies, including Halliburton Co., are also weighing cuts after crude and natural gas prices dropped, leading oil companies to decrease spending on exploration and production in 2009.
