TORONTO - The Toronto Stock Exchange pared early triple-digit losses but still closed lower Tuesday as North American traders returned from the Labour Day holiday focused on persistent concerns about a global slowdown.
The S&P/TSX composite index finished the day down 83.87 points at 12,518.54 after falling more than 200 points earlier in the session.
The TSX Venture Exchange fell 20.54 points to 1,789.82.
Wall Street markets also lost ground with the Dow Jones industrial average down 100.96 points at 11,139.3. The Dow had been down more than 300 points in morning trading but regained much of the lost ground after European markets closed.
The Nasdaq index fell 6.5 points to 2,473.83 and the S&P 500 was down 8.73 points at 1,165.24.
The Canadian dollar was off 0.58 of a cent at 101.03 cents US as commodity prices slipped.
The October oil contract on the New York Mercantile Exchange fell 43 cents to US$86.02 a barrel. The energy sector on the TSX was off 1.8 per cent, with shares in Suncor Energy Inc. (TSX:SU) down 72 cents at C$29.28.
Copper prices on the Nymex lost seven cents to US$4.06 a pound. The mining sector on the TSX was down 2.3 per cent with shares in Teck Resources Ltd. down 77 cents at C$41.34.
Meanwhile, gold prices declined US$3.60 to $1,873.30 an ounce on the Nymex, although the gold-heavy materials index was one of the few gainers on the TSX. Shares in Kinross Gold Corp. (TSX:K) added 24 cents to C$17.58.
The weakness came as concerns grew that Europe's debt problems could slow growth around the world, which prompted a huge sell-off overseas on Monday although many of those markets stabilized with smaller declines on Tuesday.
Europe's debt problems have simmered for more than a year. Bailouts for Ireland and Greece have not quelled fears that either country will default on its loans, an event that could lead to the collapse of the euro. Those concerns continued Tuesday as Italy was hit by a general strike ahead of votes this week on a budget-cutting package needed to shore up that country's finances.
Investors also worried about the possibility of another recession in the U.S. following a jobs report Friday that was the worst since September 2010.
"It's residual, it's not necessarily anything new that has come out, but there's just further data to indicate the economy is barely reading a pulse in the United States," said Philip Petursson, managing director at Manulife Asset Management.
"We have absolutely no leadership in terms of any solutions being provided by politicians in Europe or the United States to try and solve any of the problems, so this is all catch-up."
On Wednesday, the Bank of Canada will give its latest interest rate announcement. The central bank had expected 1.5 per cent growth in the second quarter but Statistics Canada reported last week that the economy contracted.
The Institute of Supply Management released its report on the U.S. service sector Tuesday morning showing that service firms grew at slightly faster pace in August compared with July.
That was better than the expectations of economists who had predicted the sector would post its fourth consecutive monthly decline. However, the sector remains weak, adding to concerns that the American economy is at risk of another recession.
The Institute for Supply Management says its index for service companies rose to 53.3 in August, up from 52.7 in July. Any reading above 50 indicates expansion.
On Thursday, U.S. President Barack Obama will unveil his job program before a joint session of congress. While investors are waiting to hear what the president will do to stimulate jobs, there are also questions about whether he can possibly do anything, Petursson said.
"The reason why there is this concern out there is that governments are so indebted and it seems the only way they can get out of this problem is creating new types of stimulus, which would cost money they don't have, which would drive them further into the problem," he said.
In Canadian corporate news, Wescast Industries Inc. (TSX:WCS.A) shares gained 24 per cent or $2.27 to $11.90 as it announced it is to be acquired by China-based Sichuan Bohong Industry Co. for about $179.9 million.
Meanwhile, shares in Research In Motion (TSX:RIM) added $1.04 to $30.63. Jaguar Financial Corp. (TSX:JFC) an investment bank with a small minority holding in RIM, is urging fellow shareholders to push the BlackBerry maker to explore its strategic options, including potentially selling or splitting up the company.
And Rogers Communications Inc. (TSX:RCI.B) shares fell 72 cents to $37.34 after it announced it was hoping to expand beyond the telecom business by starting up a bank.
Meanwhile, analysts said stocks are likely to face a choppy few days as investors fret over growing signs of political discord within the eurozone.
Thursday's monthly interest rate decision from the European Central Bank and a subsequent news conference by ECB president Jean-Claude Trichet will also be closely monitored.