06/07/2013 08:17 EDT | Updated 08/07/2013 05:12 EDT

Miners pull TSX lower, U.S. indexes surge amid stronger than expected jobs data

TORONTO - Gold and base metal stocks pushed the Toronto stock market lower amid stronger-than-expected job creation numbers in Canada and U.S. for May.

The S&P/TSX composite index closed down 36.04 points to 12,373.3, with the market finding support from most non-resource sectors.

Statistics Canada reported 95,000 jobs were created in May, most of them full-time positions. Also, the unemployment rate moved down to 7.1 per cent from 7.2 per cent.

Economists had expected job creation somewhere in the neighbourhood of 15,000 last month.

The Canadian dollar was off early highs but still up 0.59 of a cent to 98.06 cents US following the report.

U.S. indexes advanced, but were also off session highs as traders also took in a stronger-than expected read on American employment last month.

The Dow Jones industrials jumped 207.5 points to 15,248.12 as the U.S. Labor Department said that 175,000 jobs were created during May.

The expectation had been the U.S. economy would crank out about 165,000 additional jobs during May.

The Nasdaq composite index was ahead 45.16 points to 3,469.22 while the S&P 500 index rose 20.82 points to 1,643.38.

Traders hoped the jobs data wasn't strong enough to persuade the Federal Reserve to start tapering its bond purchases. The quantitative easing program has kept interest rates low and also helped fuel a strong rally on stock markets this year, leaving the Dow industrials up a good 16 per cent year to date.

The Dow gained 0.87 per cent this past week while the TSX shrank 2.14 per cent, leaving the main index down about 60 points year to date.

Markets have been volatile over the past couple of weeks after Fed Chairman Ben Bernanke said the U.S. central bank might pull back on its $85 billion-a-month bond-buying program if economic data, especially hiring, improved significantly. Other Fed officials have spoken about a winding down of asset purchases sooner.

"This market has been very hooked on QE and is very susceptible to a withdrawal, obviously," said Sid Mokhtari, market technician with CIBC World Markets.

"A whole bunch of newspapers in the U.S. and articles and journals, were talking about how the market is addicted to QE and it’s referred to as crack and heroin and all these things. So it’s natural for the market to feel that withdrawal or even the assumption of that kind of withdrawal."

Meanwhile, the gold sector was the leading TSX decliner Friday, down about five per cent as the August gold contract price fell $32.80 to US$1,383.10 an ounce.

Gold has fallen sharply since hitting a record high of US$1,921 in early September 2011 at a time when massive stimulus measures by central banks raised worries about a sharp spike in inflation.

"Gold was almost to some extent a fear trade, it was almost an inflationary trade," Mokhtari said.

"We don't have necessarily inflation assumptions right now. Down the road maybe, but not now."

Barrick Gold Corp. (TSX:ABX) lost $1.07 to C$20.60 while Goldcorp Inc. (TSX:G) fell $1.55 to $29.09.

The base metal group was down almost three per cent while copper fell five cents at US$3.27 a pound and sector heavyweight Teck Resources (TSX:TCK.B) gave back $1.11 to C$25.65.

The telecom sector was down 0.25 per cent. The component has headed lower since earlier in the week after Industry Minister Christian Paradis said Mobilicity and other new wireless carriers won’t be allowed to sell spectrum to big carriers. The move was a setback for Telus (TSX:T) which had asked permission to acquire Mobilicity and its spectrum. Its shares gave back 23 cents to $34.67.

Performance was generally more positive outside of miners, and tech stocks led advancers, up 1.14 per cent with CGI Group (TSX:GIB.A) ahead 47 cents to $31.44 .

Industrials also lent support, as engineering firm SNC Lavalin Group (TSX:SNC) jumped $2.47 to $44.44.

Financials also turned positive with Manulife Financial (TSX:MFC) ahead 33 cents to $16.31.

July crude on the New York Mercantile Exchange gained $1.27 to US$96.03 a barrel, leaving the energy sector slightly higher. Imperial Oil (TSX:IMO) ran ahead 37 cents to C$39.76.