TORONTO _ The Toronto stock market was lower Friday morning amid an unexpected decline in Canada's economy in November and a rating downgrade covering many of Canada's big banks.
The S&P/TSX composite index fell 42.45 points to 14,594.83 as Statistics Canada said gross domestic product in November declined 0.2 per cent, worse than the flat showing that economists had expected after a 0.3 per cent increase in October.
The agency said the drop extended across major sectors including manufacturing and mining, quarrying, and oil and gas extraction.
The Canadian dollar plunged to fresh six-year lows on the data, down 0.94 of a cent to 78.36 cents US.
The TSX financial sector was the major weight, down 1.5 per cent focus after Barclays Bank downgraded several of the major Canadian banks, saying even before the StatsCan report that ``slower-than-anticipated economic growth will weigh on the earnings growth and valuations of the group.''
Barclays downgraded Bank of Montreal (TSX:BMO, Royal Bank (TSX:RY) and TD Bank (TSX:TD) _ three of the Big Six _ plus the relatively small Laurentian Bank (TSX:LB) to underweight from equal weight.
Barclays called last week's surprise quarter-point cut to a key Bank of Canada rate ``a net negative'' for the banks, adding that ``the action from the central bank implies lower economic growth than is currently reflected in the market.''
U.S. indexes were mixed as economic growth in the fourth quarter missed expectations, with GDP for the period coming in at 2.6 per cent, down sharply from a five per cent rise in the third quarter. Economists had generally expected a reading of 3.1 per cent.
The Dow Jones industrials declined 12.91 points to 17,403.94, the Nasdaq gained 14.5 points to 4,697.91 and the S&P 500 index lost 4.95 points to 2,016.3.
The American GDP report was of particular concern as the U.S. economy has been the top global economic performer for many months.
Growth in China has stalled and the European Central Bank is just now embarking on a program of quantitative easing aimed at stabilizing the economy and boosting inflation.
Elsewhere on the TSX, the energy sector was 0.52 per cent higher as oil climbed 52 cents to US$45.05 a barrel and more energy companies slash spending plans and in some cases cut dividends.
Canadian Oil Sands Ltd. (TSX:COS) said Thursday that it was slashing its quarterly dividend to five cents a share. It had already cut the payout in December to 20 cents from 35 cents at a time when oil was about US$67 a barrel. Crude has since plunged to around $45. COS shares fell 54 cents or almost eight per cent to $6.30 after falling seven per cent Thursday.
Canadian Oil Sands also posted quarterly net income of $25 million, down nearly 87 per cent from a year ago. Cash flow from operations fell to $207 million, or 43 cents per share, from $391 million, or 81 cents a share.
On Friday, Bankers Petroleum (TSX:BNK) said that it was lowering 2015 capital program by 30 per cent to US$153 million. It is also lowering its production forecast by five per cent and its shares gained 16 cents to $2.82.
The base metals sector rose 0.35 per cent while March copper edged up a penny to US$2.47 a pound.
The gold sector was ahead 0.6 per cent while April gold gained $7.20 to US$ 1,261.80 an ounce.