The S&P/TSX composite index closed off the worst levels of the session, coming back from a 119-point slide to close down 31.2 points at 12,331.85 after Statistics Canada reported the economy shed 54,500 jobs — all full time — in March. The unemployment rate also rose by 0.2 per cent to 7.2 per cent.
Generally speaking, economists had expected about 6,500 jobs to have been created last month, although BMO Capital Markets had suggested it might be as high as 18,000.
The Canadian dollar had tumbled more than a cent in the wake of the weak data. By the end of the day, the currency was down 0.39 of a cent to 98.39 cents US.
U.S. markets also fell after the Labour Department reported that the economy only managed to crank out 88,000 jobs last month even as the jobless rate declined 0.1 per cent to 7.6 per cent.
The Dow Jones industrials also came from a triple-digit tumble to close down 40.86 points to 14,565.25, the Nasdaq composite index lost 21.12 points to 3,203.86 and the S&P 500 index shed 6.7 points to 1,553.28.
The TSX Venture Exchange gained 15.13 points to 1,041.85.
"There's not a lot to get joyful about in this mess," said Fred Ketchen, manager of equity trading at Scotia Capital.
"You have to say, it's nice to be optimistic. But you have to get back to the land of reality and at the present time, there’s more negative news than positive news."
Traders had started the week off expecting that the U.S. non-farm payrolls report would show that about 190,000 jobs were produced in March following a reading of 220,000 in February.
But that was before the release of data over the past few days showing slower than expected growth in both the manufacturing and service sectors, capped off with a report from payroll firm ADP that the economy created fewer than expected jobs in the private sector.
It has been a tough week on markets, with the TSX losing 3.27 per cent to move into the negative column for the year to date on worries about the pace of the U.S. and Chinese economies.
The resource-based TSX has been particularly under pressure by mining stocks. Base metals are down 17.5 per cent so far this year, reflecting weak commodity prices. The gold sector has fallen 22.2 per cent as gold companies have suffered from bullion costs that haven't kept pace with growing costs of getting the precious metal out of the ground.
The more broadly based Dow industrials is still up around 11 per cent for the year, having ended the week flat.
Financials led the declines in Toronto on Friday amid concerns that interest rates will stay ultra-low for even longer than expected.
"Those people who have been saying interest rates will stay low until year end, I think they're probably getting reinforcement of their opinion because I don’t see any reason why anybody would even think about raising rates in this environment," Ketchen said.
TD Bank fell $1.09 to $80.91 while Scotiabank (TSX:BNS) gave back 84 cents to $56.90.
Defensive stocks also pushed the TSX lower.
The utilities group was down 0.6 per cent as Atlantic Power (TSX:ATP) shed 11 cents to $4.88.
The consumer discretionary group was down 0.47 per cent after clothing retailer Reitmans (Canada) Ltd. (TSX:RET.A) reported a net loss of $1.1 million or a penny per diluted share in its fiscal 2013 fourth quarter, reversing year-earlier profits of $4.7 million or seven cents per share.
Commodity stocks turned positive after sustaining sharp declines earlier in the week.
The metals and mining sector led advancers, up almost two per cent while May copper on the New York Mercantile Exchange slipped a penny to US$3.34 a pound. First Quantum Minerals (TSX:FM) gained 68 cents to C$19.29.
The energy sector was up 0.74 per cent while the June crude contract on the New York Mercantile Exchange lost 56 cents to US$92.70 a barrel. Cenovus Energy (TSX:CVE) was 36 cents higher at C$30.35.
The gold sector was slightly higher while the weak jobs data pushed bullion prices higher after a string of declines this week, rising $23.50 to US$1,575.90 an ounce.
"Well, it's a fear indicator — (gold) tends to do well when the world is falling apart," said John Stephenson, portfolio manager at First Asset Funds Inc.
"Right now, we're falling apart."
Goldcorp Inc. (TSX:G) gained 38 cents to C$32.33.
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