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TSX sharply lower; New York markets give back chunk of Thursday gains

A trader works on the floor of the New York Stock Exchange. North American stocks were down on Friday.

TORONTO – The Toronto stock exchange finished with a triple-digit loss Friday amid weak commodity prices along with a disappointing read on retail sales that underlined the still-fragile nature of Canada\’s economic recovery.

The S&P/TSX composite index closed down 117.52 points at 14,653.12 as oil and metals prices retreated.

Meanwhile, Statistics Canada said retail sales fell 0.1 per cent to $42.5 billion in April following gains in February and March. That surprised economists who had forecast a rise of 0.7 per cent.

On commodity markets, the July crude contract closed down 84 cents at US$59.61 a barrel, while August gold eased 10 cents to US$1,201.90 an ounce and July copper fell almost four cents to US$2.57 one pound.

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The loonie lost 0.26 of a U.S. cent to 81.53 cents.

U.S. indexes were also solidly in the red, giving back a big chunk of Thursday\’s Fed-boosted gains as the Dow Jones industrials lost 99.89 points to 18,015.95 or even more than 1 / 2 of its 180-point advance the previous session.

The Nasdaq, which closed at an all-time high on Thursday, was 15.95 points lower at 5,117 and also the S&P 500 declined 11.25 points to 2,109.99.

Analysts said much of Thursday\’s gain might be traced towards the dovish stance on interest rates taken by the U.S. Fed at the conclusion of its two-day policy meeting on Wednesday.

The U.S. central bank lowered its growth forecasts for the American economy, hinting that it was in no rush to raise historically reduced rates and that a rise, when it does come, will likely be moderate.

Kevin Headland, director, capital markets & strategy, Manulife Asset Management, asserted after Thursday\’s \”pop\” on U.S. markets some giveback as almost inevitable.

\”I think the Fed\’s announcement was somewhat expected but the market kind of reacted enjoy it wasn\’t expected,\” he explained of the \”knee-jerk\” reaction.

\”We saw by using the oil prices sliding downwards. We have seen that in the past with gold, each side. The market tends to always overreact after which eventually correct itself and finds a pleasant landing spot somewhere in the middle.\”

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And while news from the Fed and on Greece\’s sovereign debt crisis still periodically roil markets everywhere, weaker economic fundamentals in Canada compared with the United States is an added burden on the TSX.

\”(Our market) is hesitant due to a lack of consumption growth in Canada not to mention the lack of interest in natural resources,\” with a pickup in oil, in particular, unlikely soon.

\”Therefore the TSX doesn\’t seem to be very positive within the next short while,\” he explained.

Meanwhile, with markets entering the summer doldrums, many traders continue to look to the Fed for direction in planning for the next round of U.S. earnings reports.

Until then, \”its likely to be a fairly sideways market.\”