06/11/2015 17:31 EDT | Updated 06/11/2016 01:12 EDT

Toronto stock market down amid falling commodity prices, Bank of Canada warning

TORONTO - The Toronto stock market turned lower Thursday amid falling commodity prices and a warning by the Bank of Canada about the ongoing risk to the Canadian economy as a result of low oil prices.At mid-afternoon, the S&P/TSX composite index was down 47.96 points at 14,841.08, while the loonie retreated 0.27 of a U.S. cent to 81.28 cents.On the commodity markets, the July crude oil contract was down 51 cents at US$60.92 a barrel, while the August gold contract gave back $6 to US$1,180.60 an ounce.U.S. markets were modestly higher after major gains on Wednesday that saw the widely watched Dow Jones industrial average shoot up more than 230 points.Enthusiasm in New York was helped by a report from the U.S. Commerce Department that showed American shoppers returned to stores in a big way in May, with retail sales rising a seasonally adjusted 1.2 per cent last month after a 0.2 per cent gain April.At mid-afternoon the Dow was up an additional 65.93 points to 18,066.33, while the Nasdaq advanced 9.78 points to 5,086.47 and the S&P 500 was up 6.22 points at 2,111.42.In Ottawa, the Bank of Canada said in its latest financial system review that the oil slump on its own is unlikely to set off considerable systemic stress and that the probability of a severe recession remains low.But it warned that the weakness caused by cheaper crude has put the Canadian system more at risk to any event that would lead to widespread job losses and falling incomes.Dawn Desjardins, RBC's assistant chief economist, said in a note that while the report "clearly states that this is the bank's attempt to 'raise awareness' ... and possible triggers," it was not intended to present "most likely scenarios.""The bank assessed that the overall risk to Canada's financial system has risen in the face of lower oil prices," Desjardins said, but she added that the central bank's assurance of improvement in the financial system's ability to deal with unanticipated shocks "took some of the sting out of this upgrading in the overall risk."The Commerce Department report on retail spending indicates Americans are showing greater confidence in an economy after a dismal first quarter that many observers have blamed on severe winter weather.It could also be evidence of stronger economic growth in the current April-June quarter than earlier assumed."The whole package is looking heartier," said Jennifer Lee, a senior economist at BMO Capital Markets. "Robust job growth, near decade-high auto sales, revolving credit rising at its second-fastest pace in eight years, and now, solid retail sales."— With files from The Associated Press