Toronto, New York markets down amid drop in oil prices

TORONTO -- The month of February began on a sour note for North American stock markets amid a sharp drop in oil prices and disappointing reports on manufacturing at home and abroad.

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In mid-afternoon trading Monday, the Toronto Stock Exchange's S&P/TSX composite index was down 188.28 points at 12,633.85, reversing direction on a big rally that closed out trading last week.

New York markets also contracted, but not nearly as much, with the Dow Jones industrial average losing 84.33 points to 16,381.97. The S&P 500 gave back 8.47 points to 1,931.77 and the Nasdaq slipped 14.44 points to 4599.52.

In commodities, the March contract for benchmark crude oil was down $1.95 at US$31.67 a barrel and the energy sector was the biggest decliner on the TSX, off 4.44 per cent.

However, the usually oil-sensitive Canadian dollar managed to continue its recent buoyancy, rising 0.24 of a U.S. cent to 71.64 cents US.

Elsewhere in commodities, the March contract for natural gas plummeted 15 cents to US$2.15 per mmBtu, while April gold was up $11.20 at US$1.127.60 an ounce and March copper lost a penny to US$2.06 a pound.

Overseas markets were also mostly negative after a survey of China's manufacturing purchasing managers fell to its lowest level in more than three years, a possible sign of further weakness in the world's second-largest economy.

"There are precious few indicators that point to a recovery within China and this continues to spell bad news for the global economy which has been hugely reliant upon Chinese demand," said Joshua Mahony, a market analyst at IG.

Ryan Larson, head of U.S. equity trading at RBC Global Asset Management, said that with the price of oil down sharply it wasn't surprising to see the broader U.S. market following suit.

"And you've got China and emerging market slowdown worries again. It's more of the same of what caused the market to sell off in January," he said.

Meanwhile, a report on U.S. manufacturing by the Institute for Supply Management came in at 48.2 in January, up from a revised 48.0 in December, but missing analyst expectations and still indicating contraction.

Similarly, a monthly survey of Canadian purchasing managers suggested the outlook for manufacturing north of the border remains negative, although not quite as dire as in December because of a pickup in export demand. The RBC Canadian Manufacturing PMI registered 49.3 in January, just below the 50-point mark that indicates a neutral outlook.

With files from The Associated Press


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