The S&P/TSX composite index edged 2.3 points lower to 12,892.11, pressured by falling gold stocks as optimism about ending the U.S. government impasse pushed bullion sharply lower.
The Canadian dollar was up 0.39 of a cent to 96.58 cents US as job creation for September narrowly beat modest expectations and the unemployment rate fell to the lowest level since December 2008.
Statistics Canada said job creation came in at 11,900 last month while the jobless rate fell 0.2 of a point to 6.9 per cent as fewer young people looked for work. Economists had been looking for the economy to have created about 10,000 jobs in September after cranking out almost 60,000 in August.
U.S. indexes added to big gains registered Thursday, with the Dow Jones industrials climbing 111.04 points to 15,237.11, the Nasdaq ahead 31.13 points to 3,791.87 and the S&P 500 index up 10.64 points at 1,703.2.
North American markets initially surged after Republican House Speaker John Boehner proposed extending the debt limit through Nov. 22, conditioned on President Barack Obama agreeing to negotiate over spending cuts and the government shutdown.
Hopes rose that the U.S. would avoid a possible default after the current borrowing limit expires on Oct. 17.
"The sentiment changed about 180 degrees," said Bob Gorman, chief portfolio strategist at TD Waterhouse. But he cautioned that it’s far too early to sound the all-clear on the debt ceiling issue.
"The probability is extremely high that ultimately something gets sorted out here, (but) they are so far apart from an ideological standpoint that negotiations could be quite difficult. So I wouldn’t be surprised to see sentiment worsen in the next couple of trading days, particularly if you don’t see something a little firmer over the course of the weekend."
Obama met with GOP senators late Friday morning. Senate Republican leader Mitch McConnell said that the session with Obama was useful and he hoped that Senate Republicans could find a way out of the impasse.
Utilities led advancers, up 1.3 per cent as Atlantic Power (TSX:ATP) ran up 25 cents to $5.01.
Oil prices fell with the November crude contract on the New York Mercantile Exchange down 99 cents to US$102.02 a barrel but the energy sector rose 0.46 per cent. Imperial Oil (TSX:IMO) advanced 47 cents to C$45.12.
Moody’s Investor Services has cut Talisman Energy’s (TSX:TLM) rating outlook to negative from stable. Moody’s said the downgrade reflects the uncertain outcome of the portfolio transformation taking place under the company's strategic repositioning.
The change in outlook comes just days after activist investor Carl Icahn disclosed a six per cent stake in the company and Talisman shares slipped two cents to C$12.71.
The financials sector was up 0.43 per cent with Sun Life Financial (TSX:SLF) ahead 44 cents at $33.77.
The gold sector was the weakest component, down about three per cent as December bullion faded $28.70 to US$1,268.20 an ounce. Barrick Gold (TSX:ABX) dropped 73 cents to C$17.81.
The base metals sector was flat even as December copper gained two cents to US$3.27 a pound. HudBay Minerals (TSX:HBM) shed 13 cents to C$7.82.
In other corporate news, fertilizer giant Potash Corporation of Saskatchewan Inc. (TSX:POT) (NYSE:POT) is reducing its earnings guidance for the third quarter to reflect lower sales. The company says earnings per diluted share now are expected to come in at about 41 cents, down from the 45 to 60 cents per share it predicted back in July. Potash shares lost 51 cents to $32.46 on the TSX.
On the earnings front, JPMorgan Chase, the biggest U.S. bank by assets, is reporting a surprise third-quarter loss after a big charge for legal expenses. The bank lost US$400 million or 17 cents a share in the quarter, compared with a then-record $5.7-billion profit a year earlier.
Analysts had expected earnings of $1.19 a share. Revenue fell eight per cent, to US$23.9 billion, missing analysts’ estimate of $24.1 billion. JPMorgan shares were off a cent to US$52.51.
Optimism that a debt deal will be reached pushed the TSX up 1.04 per cent this week while the Dow industrials gained 1.09 per cent.