TSX heads for lower open amid falling commodities, rising European concerns

TORONTO – The Toronto stock market looked set for a negative session Monday amid lower commodity prices and little in the way of market-moving economic or corporate news.

The Canadian dollar was up 0.06 of a cent to 100.33 cents US.

U.S. futures were negative ahead of the December read on factory orders with the Dow Jones industrial futures down 38 points to 13,892, the Nasdaq futures fell 6.5 points to 2,750 while the S&P 500 futures declined 4.25 points to 1,502.5.

Economists expect factory orders to have increased 2.4 per cent from November.

Stocks finished positive Friday in the wake of a solid employment report for January and other data showing the manufacturing sector expanding faster than thought, pushing the Dow industrials past 14,000 for the first time in over five years.

Commodity prices headed lower following sharp gains on Friday.

The March crude contract on the New York Mercantile Exchange lost 99 cents to US$96.78 a barrel.

April bullion fell $6.10 to US$1,664.50 an ounce while March copper slipped two cents to US$3.77 a pound.

Meanwhile, investors were looking to Europe, particularly Italy, where the upcoming election is proving to be a closer race than many people had thought. There are worries that the next government could dilute the financial reforms put in place by the administration of Mario Monti.

And Spain is also generating concern as the government is increasingly embroiled in a corruption scandal.

The European Central Bank is meeting this week as well. Though no change in policy is expected, traders will look to see what bank president Mario Draghi has to say about the strength of the euro. Though its advance in recent weeks is a sign of optimism over the currency’s future following a seeming easing in financial market worries over Europe’s debt crisis, it potentially makes life more difficult for the eurozone’s exporters and that could delay a recovery from recession.

European bourses were lower with London’s FTSE 100 down 0.9 per cent, Frankfurt’s DAX fell 0.76 per cent while the Paris CAC 40 gave back 0.93 per cent.

Earlier in Asia, Japanese stocks continued to gain ground alongside the falling yen, which is expected to help the country’s big exporters. The Nikkei 225 closed 0.6 per cent higher.

The yen has been falling over the past few weeks as the new government focuses on getting a moribund economy going again. As part of that drive it has asked the Bank of Japan to do more and that’s probably going to mean an expansion of the money supply.

Elsewhere, Hong Kong’s Hang Seng fell 0.2 per cent while South Korea’s Kospi edged down 0.2 per cent.

Turquoise Hill Resources (TSX:TRQ) will be in focus after Mongolia’s president said his country should have more control of the Oyu Tolgoi copper and gold project. Mining giant Rio Tinto has a 66 per cent stake in Oyu Tolgoi through its 51 per cent interest in Vancouver-based Turquoise Hill, formerly known as Ivanhoe Mines Ltd. The development is the world’s biggest copper mine under construction. Mongolia has a 34-per cent stake in the project.