TSX down as traders look to Fed meeting

The Toronto stock market was lower Friday as traders looked ahead to next week’s U.S. Federal Reserve meeting and hope that the central bank will provide clues as to whether it plans to ease off on some of its economic stimulus.The S&P/TSX composite index declined 34.11 points to 12,243.02.The Canadian dollar was up 0.03 of a cent to 98.4 cents US amid a disappointing update on Canadian manufacturing.Statistics Canada says manufacturing sales fell 2.4 per cent in April to $48.2 billion. It’s the fourth decline in five months and the largest monthly percentage drop since August 2009.The agency says lower sales in the petroleum and coal product and primary metal industries were largely responsible for the decline.U.S. indexes were little changed amid signs of a weakening American manufacturing sector and consumer sentiment.The Dow Jones industrials rose 10.56 points to 15,186.64 as May industrial production was flat. Economists had expected a 0.3 per cent increase after production fell by 0.5 per cent in April.The University of Michigan’s consumer confidence index came in at 82.7, well below expectations that it would remain at a five year high of 84.5.The Nasdaq was down 1.95 points to 3,443.41 and the S&P 500 index edged up 1.37 points to 1,637.73. Concerns about Fed intentions have weighed on markets since late last month. That’s when Fed chairman Ben Bernanke said that the Fed might pull back on its US$85 billion-a-month bond-buying program, known as quantitative easing, if economic data improves, especially hiring.The QE program has underpinned a strong rally on U.S. markets.The Fed holds its next regularly scheduled meeting on interest rates next Tuesday and Wednesday and wraps up with a news conference by Bernanke.Hopes for more details were fuelled Thursday by a Wall Street Journal story that suggested Bernanke will likely use next week’s meeting to try to calm market worries that the central bank is in a hurry to moderate its bond purchases.Consumer staples were the biggest gainer as shares in Empire Co. (TSX:EMP.A) continued to charge ahead after the majority owner of grocer Sobey’s announced plans Wednesday to take over rival Canada Safeway for $5.8 billion in cash. Its shares were up $1.98 to $76.75 after jumping 10.59 per cent on Thursday.Utilities were ahead 0.46 per cent following a string of losses. 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/interest-rate sensitive sectors such as REITS, utilities, telecom and pipeline stocks.Fortis Inc. (TSX:FTS) gained 47 cents to $32.77. On Thursday, New York regulators cleared the way for Fortis Inc. to buy CH Energy Group, the parent of Central Hudson Gas and Electric Corp. in a deal valued at US$1.5 billion.Techs were also supportive with BlackBerry (TSX:BB) ahead 44 cents to $15.14, adding to a gain of about six per cent Thursday after Societe Generale raised its rating on the stock to “buy” from “sell,” saying channel checks show the Canadian smartphone maker’s new devices are selling well.Telecoms fell 0.5 per cent and BCE Inc. (TSX:BCE) gave back 29 cents to $44.34.Financials shed 0.33 per cent with Scotiabank (TSX:BNS) down 38 cents to $56.85.Commodity prices were higher with the July crude contract on the New York Mercantile Exchange ahead $1.20 to US$97.89 a barrel. The energy sector was off 0.2 per centThe base metals sector was off 0.16 per cent as July copper was up two cents to US$3.20 a pound. First Quantum Minerals (TSX:FM) gave back 10 cents to C$17.37.The gold sector was off about 0.7 per cent as August bullion rose $10.20 to US$1,388 an ounce. Goldcorp Inc. (TSX:G) faded 32 cents to $28.60.Markets have also been weighed down by concerns that the Bank of Japan has done all it is prepared to do to stimulate the Japanese economy.In April, the Bank of Japan announced a massive stimulus in an attempt to get inflation up to two per cent. The euphoria that drove the Nikkei up to five-year highs has been followed by wild fluctuations. The index is now around 20 per cent down from its May 23 peak, leaving the market in bear market territory.Tokyo’s Nikkei 225, the regional heavyweight, gained 1.9 per cent in Friday trading, recovering some of its losses after Thursday’s 6.4 per cent plunge .China’s benchmark Shanghai Composite Index gained 0.6 per cent, coming off its lowest close in six months following Thursday’s 2.8 per cent slide. Hong Kong’s Hang Seng gained 0.4 per cent and Seoul added 0.4 per cent.European bourses were positive with London’s FTSE 100 index ahead 0.02 per cent, Frankfurt’s DAX rose 0.98 per cent and the Paris CAC 40 was up 0.6 per cent.