TSX declines on global growth worries

The Toronto Stock Exchange moved lower for a third day Thursday as traders worried about the prospects of slowing global growth.

The commodities-heavy S&P/TSX composite index closed down 74.50 points at 12,339.36, after falling by more than 200 points during the morning.

The loonie dipped below par in the morning but later turned positive, closing up .12 of a cent at 100.33.

Oil prices continued to lose ground after data released Wednesday showed a much bigger than expected increase in U.S. crude inventories last week.

The June crude contract on the New York Mercantile Exchange closed down $2.65 at $103.31 US a barrel after tumbling almost $2 Wednesday.

France's prime minister said there's a "good chance" the U.S. and Europe will release oil reserves, which could drive down prices by adding supply.

President Barack Obama Thursday called on Congress to end tax breaks for oil companies, but the Senate voted the proposal down. The price of oil has doubled since October, and the price of gasoline has risen about 20 per cent this year.

The benchmark price for natural gas, another major Canadian commodity export, plunged after new data showed inventories last week grew by 57 billion cubic feet to 2.437 trillion cubic feet. May natural gas was down 13 cents to $2.15 in New York.

Canadian and American prices are already at a decade low with record high inventories. The Alberta spot price is ranging between 1.50 and 1.60.

May copper was up two cents at $3.81 US, after falling 10 cents over the last two sessions.

Bullion for June delivery fell $5.60 to $1,654.90 US an ounce, adding to a $27 loss on Wednesday.

Investors await federal budget

Canadian investors also awaited the details of the federal government's budget, due for release after the markets close.

Traders expected billions in spending cuts, an outline of future changes to eligibility for Old Age Security — possibly by raising the eligibility to 67— measures aimed at encouraging innovation and boosting productivity.

U.S. markets were also weak despite encouraging employment data with the Dow Jones industrial average closing up 19.61 points at 13,145.82. The Nasdaq composite index fell 9.60 points to 3,095.36 and the S&P 500 index declined 2.26 points to 1,403.28.

The U.S. Labour Department reported that the number of Americans who sought jobless benefits last week reached a new four-year low, falling by 5,000 to 359,000.

Also, the U.S. government's third and final look at fourth quarter growth confirmed that the economy grew at an annual rate of three per cent in the October-December period, the fastest pace since the spring of 2010.

However, economists believe that growth slowed to around 1.5 per cent in the current quarter. U.S. economic indicators have mostly surpassed expectations this year, particularly with regard to the jobs market, and that has supported stocks.

However, data showing a weakening in consumer confidence, a disappointing report from the Federal Reserve Bank of Richmond's measure of regional manufacturing, and data showing durable goods orders increased by 2.2 per cent last month, a rise that was less than expectations, have made investors wary.

China, a pillar in the recovery, has shown signs of slowing and, because of its huge appetite for oil and metals, that has weighed on commodities.

But the Chinese economy has been slowing from double digit growth to gains of the seven per cent region as the government slows the economy in order to drive down high inflation.

Those Chinese growth projections are "nothing to sneeze at," said Garey Aitken, director of equity research at Bissett Investment Management.

"But I think we have seen a gradual but nonetheless definitive shift down in Chinese growth and what that means in terms of that whole emerging market for commodities and resources has had a noticeable impact on the Canadian equity market given our cyclical orientation."

There were reminders, too, that Europe has not solved its debt crisis.

Though Greece is no longer on the brink of default, deep problems remain for the continent, where stronger countries are arguing that they shouldn't have to bail out weaker ones.

In Spain, workers took to the streets to protest government spending cuts, underscoring the difficulty that governments will have in reining in overblown spending.

Some investors were likely also locking profits by selling shares before the end of the financial quarter on Friday.

"After such a strong quarter, this rally is ending with a whimper rather than a bang, perhaps understandably given the run up in global markets," said Chris Beauchamp, market analyst at IG Index.

European markets also lost ground with London's FTSE 100 index closing down 1.15 per cent, while Frankfurt's DAX lost 1.77 per cent and the Paris CAC 40 declined 1.43 per cent.

In Asia, Japan's Nikkei 225 index fell 0.7 per cent and Hong Kong's Hang Seng tumbled 1.3 per cent.   

Mainland Chinese shares spiraled downward amid dwindling hopes that monetary policy will be loosened to offset the economic slowdown. The benchmark Shanghai Composite Index lost 1.4 per cent and the Shenzhen Composite Index lost 1.6 per cent.