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TSX drops on GDP data as investors focus on budget talks; materials, energy weigh

Toronto's main market edged lower Friday afternoon, weighed down by a disappointing GDP growth rate in Canada, and a mixed bag of economic data in the U.S., while investors await word on budget negotiations in Washington regarding the looming fiscal cliff. 
TSX drops on GDP data as investors focus on budget talks; materials, energy weigh

Toronto's main market edged lower Friday afternoon, weighed down by a disappointing GDP growth rate in Canada, and a mixed bag of economic data in the U.S., while investors await word on budget negotiations in Washington regarding the looming fiscal cliff. 

Statistics Canada reported Friday there was no growth in GDP during September, following a 0.1% dip in August, resulting in third quarter economic growth of 0.6 per cent on an annualized basis. Analysts expected 0.8% growth. 

The slower pace of growth was the result of declines in exports and business investment, the agency said. Exports fell 2.0% in the third quarter, the largest decline since the second quarter of 2009.

By comparison, real GDP in the United States grew 2.7% in the third quarter.

Meanwhile, traders were focused on budget talks in the U.S., with market moves based largely on comments from Democrat or Republican leaders on the progress of reaching a deal to avert the $600 billion in tax hikes and spending cuts due to take effect next year. 

Back in Toronto as of 1:00pm ET, the S&P/TSX Composite was lower by 23.84 points, or 0.2%, to 12,179.01, while the more junior S&P/TSX Venture Composite edged higher by 0.93 points, or 0.08%, to 1,219.31.

Commodities were mixed Friday, with precious metals down, and crude oil and base metal copper rising. Gold for February delivery fell $11.0 to $1,718.5 an ounce, while silver futures lost 75 cents to $33.68 an ounce. 

Crude oil for January gained 27 cents to $88.34 a barrel, while the base metal copper contract rose 3.8 cents to $3.64 a pound. 

Most of Toronto's main sectors were lately down, including materials, energy, and financials. Metals and mining and info tech were lately higher. 

Gold giants were lower Friday, with Goldcorp (TSE:G), Kinross (TSE:K) and Barrick Gold (TSE:ABX) down 0.9%, 1.3% and 1.4%, respectively. 

Gainers in materials were led by Inmet Mining (TSE:IMN), as the miner advanced a further 4% after rejecting First Quantum's (TSE:FM) takeover proposal earlier this week. First Quantum was down around 0.9%. 

Jaguar Mining (TSE:JAG) led the decline in the sector, as shares fell 5.6%. Cline Mining (TSE:CMK) also dropped around 5%. 

Energy was down in Toronto, with Talisman Energy (TSE:TLM) leading the losses, lower by almost 4%. Trilogy Energy (TSE:TET) and Petrominerales (TSE:PMG) led the gainers, up around 2.5% and 2.1%, respectively. 

Industrials were higher as Bombardier (TSE:BBD.B) advanced 2.4% in Toronto. 

Financials were lately slightly lower, as Manulife Financial (TSE:MFC) shed 0.8% and Bank of Nova Scotia (TSE:BNS) gained 0.6%. Royal Bank of Canada (TSE:RY), which kickstarted the Canadian banking reporting season yesterday on an upbeat note, fell 0.5%. 

Research In Motion (TSE:RIM) (NASDAQ:RIMM) was lately higher by 1.8%, after Goldman Sachs (TSE:GS) upgraded the BlackBerry yesterday from "neutral" to "buy" - the latest in a slew of analyst upgrades ahead of its BlackBerry 10 launch. Some remain unconvinced, however, as reportedly analysts at Berenberg Bank in London and Macquarie Securities believe the new platform will not change that drastically. 

In other corporate news, Telus Corp. (TSE:T) shares rose as it said the non-Canadian ownership of its shares is down, suggesting that US hedge fund Mason Capital could have reduced its stake in the company. Telus has been involved in a proxy fight with the US hedge fund over a plan to convert its non-voting shares into voting shares. 

Elsewhere, Isotechnika Pharma's stock jumped 89% on Friday after it said it received a partial award from its ICC arbitration regarding its right to terminate the development, distribution and license agreement with ILJIN Life Sciences. The award provides that the deal has not been terminated, and Isotechnika's contract still subsists. 

"Although the Partial Award rejected the company's interpretation of the DDL's termination provision, the result – the DDL being declared in force – brings the company much needed certainty in its pursuit of the development of voclosporin," said president and CEO, Dr. Robert Foster.

Cenovus Energy (TSE:CVE) shares were lower by 0.2% after the Environment Minister Peter Kent did not approve the company's planned Alberta gas project. He said the project would put wildlife in the CFB Suffield area at risk. 


US markets also slid Friday, as lawmakers continued to struggle over a deal to avert the so called fiscal cliff. 

Investors have been grappling with uncertainty as lawmakers and President Obama engage in brinksmanship over year-end tax hikes and spending cuts. The so-called fiscal cliff could harm economic growth, with economists believing it will likely send the US economy back into recession.

The Dow was lately down 29 points to 12,993, the Nasdaq fell 10 points to 3,002, and the S&P 500 shed 4 points to 1,412. The Nasdaq is still on track for its best November since 2009. 

On the economic front, personal spending fell a seasonally adjusted 0.2% in October after surging 0.8% in prior month, the Commerce Department said. It was the first decline since May.

Chicago PMI faintly accelerated in November, rising to 50.4 from 49.9 in October. The index came in just a shade below the 50.5 MarketWatch-compiled economist consensus.

In corporate news, Zynga (NASDAQ:ZNGA) shares extended their decline Friday, after tumbling on news that the terms of its deal with Facebook (NASDAQ:FB) had substantially changed.

Verisign (NASDAQ:VRSN), which makes money off .com Internet registrations, said it reached a new agreement with the Commerce Department that bars future price increases.

Yum! Brands (NYSE:YUM) shares sank after the firm softened its expectations for China, predicting same-store sales in that key market would decline 4% in the fourth quarter.

Genesco (NYSE:GCO) raised its full-year earnings forecast as the footwear and apparel retailer posted net profits of $40.9 million, or $1.70 a share, for the third quarter. 

WhiteWave Foods (NYSE:WWAV)  shares were lower as it posted third-quarter earnings of $26.3 million, or 18 cents per share, down from $29.8 million, or 20 cents, a year earlier.

This is the first report for the company since its October IPO. Dean Foods Co. (NYSE:DF) remains majority owner following the IPO.

United Natural Foods (NASDAQ:UNFI) reported Friday that first quarter profit rose as sales grew despite moderate inflation and higher than anticipated product shortages. 

Action-sports retailer Zumiez (NASDAQ:ZUMZ) late Thursday reported weaker third-quarter sales trends and issued a disappointing forecast, sending shares lower by 2.5% on Friday.

European markets finished higher with the DAX up 0.18%, the FTSE 100 gaining 0.12% and the CAC 40 rising 0.12%.

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