TORONTO – The Toronto stock market headed for a sharply lower open Tuesday amid a number of concerns including the failure of Japan’s central bank to unveil more measures to boost the country’s economy and a court challenge on the legality of the European Central Bank’s approach to the euro crisis.

In the background were worries about the strength of China’s economic recovery and speculation over whether the U.S. Federal Reserve will start to taper off some of its bond purchases.

On the corporate front, Lululemon Athletica Inc. (TSX:LLL) (NADAQ:LULU) was also in focus after CEO Christine Day said after the close Monday she was stepping down. She will remain in the job until a successor is named. The yoga wear retailer also handed in earnings of 32 cents a share, beating expectations of 29 cents, and announced plans to delist from the TSX. Its shares plunged 13.5 per cent in pre-market trading on the Nasdaq.

The Canadian dollar was sharply lower amid sliding commodity prices, down 0.55 of a cent to 97.59 cents US after rallying over the last two days on data showing strong job creation last month and rising housing starts.

U.S. futures were also deep in the red with the Dow Jones industrials down 115 points to 15,113, the Nasdaq futures fell 25.2 points to 2,961.8 and the S&P 500 futures gave back 14.5 points to 1,627.5.

The Bank of Japan started a big monetary stimulus earlier this year in an attempt to get the economy out of a two-decade stagnation. And there had been expectations it would announce new measures Tuesday to temper the rise in government bond yields by extending the duration on its ultra-low-interest rates to banks. Instead, the bank’s policy board merely upgraded its economic assessment and the Japanese yen strengthened at least one per cent against all its 16 major peers.

Traders also looked to the start of a two-day hearing by Germany’s constitutional court on the legality of a key European Central Bank program that has been credited with calming the 3 1/2 year-old euro debt crisis. The Federal Constitutional Court is considering arguments against the ECB’s offer to buy government bonds and lower borrowing costs for indebted countries.

Opponents of the bond-buying program say the program oversteps the ECB’s mandate, which forbids it from financing governments.

The TSX closed little changed Monday but mining stocks registered declines as data released on the weekend showed China’s export growth slowed dramatically in May to just one per cent from a year ago, which was the slowest increase since July 2012. Imports slipped 0.3 per cent from year-earlier levels, raising worries that domestic demand has weakened considerably in the world’s second-biggest economy.

Meanwhile, investors have been closely monitoring developments in the U.S. and whether the economic picture has improved enough for the Federal Reserve to reduce the amount of financial assets it buys in the markets — so-called tapering. Speculation that it will has eased somewhat after last week’s slightly better-than-expected U.S. jobs report for May.

The quantitative easing program, involving the purchase of US$85 billion of bonds each month, has kept interest rates low and also helped fuel a strong rally on U.S. stock markets.

However, the TSX has been dragged lower by mining stocks in particular, a reflection of a slow global recovery.

But speculation about cutting back on the QE program has had the effect of pushing U.S. Treasury yields sharply higher, which in turn has had a negative effect on TSX defensive sectors as well such as REITS, utilities and pipeline stocks.

Commodity prices backed off sharply Tuesday morning with July crude on the New York Mercantile Exchange down $1.24 to US$94.52 a barrel.

July copper retreated for a fourth day, down five cents to US$3.19 a pound. And August bullion dropped $12.70 to US$1,373.30 an ounce.

Disappointment over the lack of action by Japan’s central bank sent Tokyo’s Nikkei stock index down 1.5 per cent. However, the retreat was modest in light of the previous day’s 4.9 per cent advance following an upward revision of first-quarter economic data.

With China’s markets closed until Thursday for a national holiday, Hong Kong’s Hang Seng index has traded in a limited range, falling 1.2 per cent Tuesday. Elsewhere, South Korea’s KOSPI dropped 0.6 per cent.

European bourses were sharply lower as London’s FTSE 100 index and Frankfurt’s DAX lost 1.55 per cent while the Paris CAC 40 index fell 1.85 per cent.

In other corporate developments, Telus Corp. (TSX:T) has called off its plan to buy small wireless provider Mobilicity after Ottawa signalled last week that it would not allow the deal. Mobilicity, which has about 250,000 customers, said Monday that it will instead go ahead with a recapitalization plan. The deal had required the federal government to make an exception to certain rules and allow the larger company to transfer ownership of wireless spectrum owned by Mobilicity.

Dole Food’s Chairman and CEO David Murdock and his family are offering to buy the fresh fruit and vegetable business with a bid that values the entire company at approximately $1.07 billion. Murdock and other family members are making an unsolicited offer of $12 per share for the shares of the company that they don’t already own, an 18 per cent premium to Dole’s closing price Monday. Murdock currently has about a 39.5 per cent stake in Dole Food Co.