The S&P/TSX composite index fell 157.38 points to 11,659.65 as the U.S. Labour Department reported that the American economy only managed to crank out 80,000 jobs last month, below already modest expectations for 90,000 positions.
"It's more than the jobs report," said Patrick Blais, managing director and portfolio manager at Manulife Asset Management.
"A number of items are coming to the forefront: European challenges seem to be resurfacing, (Spanish bond yields are moving back higher), the market is coming to the realization that global growth will be significantly lower than expected — probably not only for this year but looking into the next year."
The Canadian dollar was down 0.41 a cent to 98.17 cents US as traders also took in tepid domestic job creation figures from Statistics Canada. The agency said 7,300 jobs were added in June, slightly better than the limited gain that had been expected.
The TSX Venture Exchange shed 15.1 points to 1,211.35.
The Dow Jones industrials dropped 124.2 points to 12,772.47.
The Nasdaq composite index lost 38.79 points to 2,937.33 and the S&P 500 index was off 12.9 points to 1,354.68.
Even before the jobs reports, markets had already been set for a weak session after International Monetary Fund Managing Director Christine Lagarde said Friday that the IMF is cutting its forecast for global economic growth in a quarterly assessment to be released later this month.
She did not say which countries or regions were contributing to the lowered assessment for 2012 and declined to give more details.
Growth in most major economies has showed signs of slowing in recent months, partly due to Europe’s chronic debt crisis and economic malaise.
The jobs report capped a disappointing week which included worse than expected readings on the American manufacturing and service sectors. But the TSX managed to end the week with a gain of 63 points.
On the TSX, the energy sector fell 2.21 per cent as crude prices fell sharply despite interest rate cuts announced Thursday by the European and Chinese central banks. The August crude contract fell $2.77 to US$84.45 a barrel. Suncor Energy (TSX:SU) gave back $1.04 to C$29.36 and Canadian Natural Resources (TSX:CNQ) was down 96 cents at $26.58.
The base metals sector fell 3.75 per cent as diminished demand prospects also pushed metal prices lower with the September copper contract on the Nymex off eight cents at US$3.41 a pound. Teck Resources (TSX:TCK.B) lost $1.04 to C$31.92 and First Quantum Minerals (TSX:FM) was 89 cents lower at $18.63.
The gold sector dropped about 2.4 per cent as bullion fell $30.50 to US$1,578.90 an ounce. Kinross Gold Corp. (TSX:K) faded 40 cents to C$8.41 and Goldcorp Inc. (TSX:G) was off 78 cents to $38.52.
All TSX sectors were lower save for a slight gain in the utilities group.
The financials sector declined 1.23 per cent while Scotiabank (TSX:BNS) was down 41.03 to $52.85 and Manulife Financial (TSX:MFC) dropped 34 cents to $10.90.
Industrial stocks also weakened with Bombardier (TSX:BBD.B) 16 cents lower at $4.04.
Canadian Pacific Railway (TSX:CP) says Tony Ingram has resigned as a director, the third departure from the CP board since the Calgary-based company's annual meeting in May. As a result of the departures and the addition of Hunter Harrison as a director and chief executive officer of the company, the nominees put forward by Pershing Square have a majority on the 14-member board of directors. CP stock declined 73 cents to $75.03.
In other corporate news, Calvalley Petroleum Inc. (TSX:CVI.A) stock soared Friday in the first trading since it received an unsolicited takeover proposal from a Norwegian oil and gas company. Its shares jumped $1.19 or 82.64 per cent to $2.63, well above the $2.30 per share proposed Thursday by DNO International.
Pengrowth Energy Corp. (TSX:PGF) is reducing its monthly dividend payments to shareholders by 43 per cent to four cents a share starting next month. The Calgary-based company says it’s making the change due to weak commodity prices and increased uncertainty in the capital and property markets and its shares fell 21 cents to $6.40.
Ottawa has approved Target Corp.’s plan to enter the Canadian market and sell books and other cultural products such as DVDs, music and magazines. Target has committed to support Canadian cultural events and organizations. The U.S. retailer is poised to begin opening the first of between 125 and 135 stores in Canada at former Zellers locations acquired from Hudson’s Bay Co. The store openings are set to start next year.