D2

By MALCOLM MORRISON
The Canadian Press

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TORONTO - Worries about the strength of an economic recovery pushed the Toronto stock market sharply lower Monday afternoon despite good U.S. economic news and a solid profit report from Ford Motor Co.

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AP

A Wall Street sign is seen at an entrance to the New York Stock Exchange. On Monday, New York’s Dow Jones industrial average gave up an early triple digit advance to move down 11 points to 9,701.7 after losing 2.6 per cent last week.

The S&P/TSX composite index fell 144.3 points to 10,766.4, with the market also weighed down by an analyst's downgrade of BlackBerry maker Research In Motion Ltd.

Monday's slide came in the wake of a tumble of just over four per cent last week on fresh doubts about whether the economic revival justifies the sharp run-up in stocks seen since early March.

"I think we're back in a market that's going to pay extraordinarily high attention to every piece of data and once again there is going to be a skittish response, up and down a lot - but moving higher, it's just going to be sort of a very bumpy ride higher," said Kate Warne, Canadian market specialist at Edward Jones in St. Louis.

RIM shares fell $4.43 or 6.94 per cent to $59.39 after Citigroup analyst Jim Suvam reduced his rating on the stock to "sell" from "buy." He cited the impact of competing smart phones, especially Motorola Inc. phones using Google Inc.'s Android operating system.

Not all analysts shared Citigroup's point of view.

"We have a buy rating on it," said Warne. "And we continue to think there's room in the very rapidly growing smartphone market for both RIM and Apple and other competitors."

In New York, shares in Ford shot up 47 cents to US$7.47 after the firm reported that gains in market share, cost cuts and the U.S. government's Cash for Clunkers program led to a US$997-million profit in the third quarter.

Ford says it now expects to be "solidly profitable" in 2011. Previously the automaker has said it would be break-even or better.

The base metals sector led decliners with the December copper contract on the New York Mercantile Exchange down one cent to US$2.94 a pound. Teck Resources (TSX:TCK.B) declined 97 cents to $30.44.

The gold sector was off 0.63 per cent as December gold in New York rose to $13.60 US$1,054 an ounce. Barrick Gold Corp. (TSX:ABX) faded 40 cents to $38.56.

The energy sector was 1.44 per cent lower with the December crude contract in New York giving up early gains to remain unchanged at US$77 a barrel after falling almost US$3 on Friday. Canadian Natural Resources (TSX:CNQ) gained $1.93 to $68.29.

The financial sector faltered amid news that U.S. commercial lender CIT Group Inc. had filed for bankruptcy protection on Sunday after a debt-exchange offer to bondholders failed. The filing, one of the biggest in U.S. corporate history, did not come as a surprise, as the lender has been struggling for months to restructure its debt. Still, the sector dropped 0.7 per cent and Manulife Financial (TSX:MFC) slid 52 cents to $19.78.

The Canadian dollar headed up 0.56 of a US cent to 92.99 cents US.

The TSX Venture Exchange was off 0.29 of a point to 1,291.12.

New York's Dow Jones industrial average gave up an early triple digit advance to move down 11 points to 9,701.7 after losing 2.6 per cent last week.

The Nasdaq composite index moved 16.65 points lower to 2,028.46 while the S&P 500 index slipped 4.8 points to 1,031.4.

Investor sentiment had improved after the latest reading on the U.S. manufacturing sector came in much better than expected.

The Institute for Supply Management's index came in at 55.7 for October, against the 53 reading that was forecast. The reading represented the strongest growth in the ISM since April 2006.

And the volume of signed contracts to buy previously occupied homes in the United States surged 6.1 per cent in September from August to 110.1.

That was much higher than the 103.8 reading that economists had expected, as buyers scrambled to take advantage of a tax credit for first-time owners that expires at the end of this month.

Other key economic data this week will offer investors a glimpse at the fourth quarter and be pivotal in determining where the market heads during the final months of the year.