Stock markets drop despite bailout

The Toronto and New York markets lost ground Friday even though U.S. legislators approved a revised $700-billion US package to address the credit crisis.

Markets were up in the morning but began to slide after the package was passed shortly after 1 p.m. ET.

By the close, the TSX/S&P composite index was down 97.19 points to 10,806.67. It had been up as much as 380 points earlier in the day.

In New York, the Dow Jones index closed down 157.15 points, or 1.5 per cent, at 10,803.35. It nearly touched 11,000 in earlier trading.

The losses Friday pushed Toronto's drop to 10.9 per cent on the week. The Dow was down 7.3 per cent.

Pundits said the indexes fell as market participants shifted their attention to economic news, especially the loss of 159,000 U.S.  jobs in September. They are also concerned about economic growth being stifled as lenders refuse to make loans.

In Canada, the central bank said Friday that it will make $12 billion in credit available so lenders can continue to make loans.

Economists suggested that the Bank of Canada and other central banks  might cut key interest rates to reduce the cost of borrowing.

On the TSX, gold, mining and materials sub-indexes were up. Shares in Potash Corp. of Saskatchewan, which crashed $35.50 to $101 on Thursday, rose $1.11 to $102.11.

The Toronto index had fallen nearly 814 points Thursday and New York was off 348 points.