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North American markets pull back sharply on disappointing GDP reports

Pessimism toward Canadian stocks appears extremely high on a historical basis

TORONTO – United states stock markets closed deeply at a negative balance in a broad-based decline that followed the release of disappointing economic growth figures on sides of the border.

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The S&P/TSX composite index finished the final trading day\’s May down 92.91 points at 15,014.09, with the energy sector helping to limit the harm as oil prices turned sharply higher. The loonie lost 0.01 of a U.S. cent to 80.41 cents.

Statistics Canada says the economy contracted at an annual pace of 0.6 per cent in the first 3 months of the year as weaker oil prices had a more severe impact than economists expected.

It is the first time real GDP growth has dipped below zero since the fourth quarter of 2011 and also the biggest slide into negative growth because the second quarter of 2009.

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The U.S. economy also contracted within the first quarter with gross domestic product weakening 0.7 percent, far worse compared to government\’s initial estimate of development of 0.2 percent. The Dow Jones industrial average closed down 115.44 points at 18,010.68, while the Nasdaq fell 27.95 points to 5,070.03 and the S&P 500 declined 13.40 suggests 2,107.39.

In commodities, oil prices had a boost after data showed U.S. oil inventories declined more than anticipated. The July crude contract rose $2.62 to US$60.30 a barrel and also the energy sector rose 0.60 percent. Meanwhile, August gold gained $1 to US$1,189.80 an ounce.

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