TORONTO - Stock markets fell sharply in early trading Friday, selling pressure intensifying after New York's Dow Jones industrial average sank to its lowest level in more than six years. Toronto's S&P/TSX composite index fell 168.4 points to 8,016.9 after rising a slight nine points Thursday. The Dow industrials tumbled 130.5 points to 7,335.5 after Thursday's 90-point slide took the blue-chip index to its lowest close since October, 2002 - the depths of the last bear market. Investors had been hoping for support at the recent low of 7,552 from last Nov. 20. Meanwhile, data showed falling prices in Canada and the U.S. Statistics Canada reported the country's annual inflation rate edged lower to 1.1 per cent in January from 1.2 per cent the previous month, driven lower by falling gasoline prices. And U.S. consumer prices rose by 0.3 per cent last month, the biggest monthly increase since a 0.7 per cent rise in July. But inflation for the 12 months ending in January was zero. The Canadian dollar was down 0.26 cent to 79.15 cents US. The TSX Venture Exchange added 2.64 points to 904.74. New York's Nasdaq composite index fell 16.91 points to 1,425.91 after losing 25 points and the S&P 500 added to Thursday's nine-point decline, down 14 points to 764.95. The financial sector in both countries bore the brunt of early losses as investors worry that a string of programs announced by the Obama administration in the past two weeks won't be enough to pull the U.S. out of a deep recession. In particular, investors have been disappointed over a lack of details contained in Treasury Secretary Timothy Geithner's bank bailout announcement last week. The TSX financial sector lost 3.8 per cent with Royal Bank (TSX:RY) down $1.39 to $26.54 and Manulife Financial (TSX:MFC) lost 61 cents to $13.89. Kingsway Financial Services Inc. (TSX:KFS) said Friday its loss for the fiscal fourth quarter exceeded gloomy estimates released earlier this month, citing underwriting charges at one of its troubled U.S. subsidiaries and impairments to goodwill. Kingsway, which focuses primarily on auto insurance, reported a loss of US$360.4 million, which widened year-earlier losses of $103.5 million. Its shares added three cents to $3.18. The energy sector lost 3.7 per cent as oil prices fell back from Thursday's 14 per cent surge. The March crude contract in New York was down $2.40 to US$37.08 a barrel. Suncor Inc. (TSX:SU) declined $1.69 to $22.26 and EnCana Corp. (TSX:ECA) stepped back 80 cents to $49.29. The gold sector was ahead 2.9 per cent as nervous investors sent the price of gold close to the US$1,000 level. The April bullion contract on the New York mercantile Exchange up $20.50 to US$997 an ounce. Goldcorp Inc. (TSX:G) rose $1.20 to $40.34. Barrick Gold Corp. (TSX:ABX) shares were up 59 cents to $46.49 after the company took a US$773-million goodwill writedown while posting a fourth-quarter loss of $468 million. Full-year profit dropped to $790 million from $1.12 billion in 2007. 2009 gold production is projected between 7.2 million and 7.6 million ounces, lower than 2008 production of 7.66 million ounces. Teck Cominco Ltd. (TSX:TCK.B) shares were down 35 cents to $3.70 after the miner agreed to sell its 50 per cent interest in the Williams and David Bell mines in northern Ontario for US$65 million to an affiliate of Barrick. The sale is part of Teck's plan to sell non-core assets to pay down debt. Shares in Tim Hortons Inc. (TSX:THI) ran ahead $2.55 to $31 even as the coffee shop chain said quarterly profit dropped to $69.1 million from $75.7 million a year earlier. Earnings were reduced by asset impairment charges related to store closures Investors will be awaiting word from the Canadian divisions of General Motors and Chrysler as they submit their restructuring plans to government officials. U.S. home improvement retailer Lowe's says its fourth-quarter profit dropped 60 per cent to US$162 million as consumers spent less on items for their houses amid a deepening recession. The company also expects lower earnings this year. Overseas, General Motors Corp.'s Swedish-based subsidiary Saab went into bankruptcy protection Friday so the unit can be spun off or sold by its struggling U.S. parent, officials said. The move comes after Sweden turned down GM's request for government help for Saab. Asian stock markets dropped Friday, with benchmarks in Japan and Hong Kong sliding about two per cent or more following Thursday's miserable performance by the Dow industrials. Japan's Nikkei 225 stock average lost 141.27 points, or 1.9 per cent, to 7,416.38, and Hong Kong's Hang Seng dropped 324.59, or 2.5 per cent, to 12,698.77. Britain's FTSE 100 fell 2.77 per cent, Germany's DAX index tumbled 3.76 per cent, and France's CAC-40 lost 3.3 per cent.

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