The Toronto stock market was flat early Tuesday as oil prices retreated while investors took in some disappointing data from the housing sector and looked to the U.S. Federal Reserve for guidance on where the American economy is headed. The S&P/TSX composite index was off 0.5 of a point to 10,793.2 after falling 92 points Monday, all but wiping out last week's gain of almost one per cent, as investors took profits from the latest leg of the rally which started in early March. However, the Toronto market is still ahead about 50 per cent since then as optimism grows that an economic recovery will be in place by the end of the year. On the economic front, Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts decreased to 132,100 units in July from 137,800 units in June. CMHC said the dip was "mostly attributable to the volatile multiple starts segment." "Although July registered a decline, housing starts are expected to improve throughout 2009," said Bob Dugan, chief economist at CMHC's Market Analysis Centre. The Canadian dollar was down 0.92 to 90.93 cents US as the American dollar continued to rally in the wake of Friday's much better than expected jobless report for last month. The September crude contract on the New York Mercantile Exchange moved down 40 cents to US$70.20 a barrel, taking the energy sector down 0.15 per cent. Canadian Natural Resources (TSX:CNQ) eased 59 cents to $63.25. The TSX Venture Exchange added 1.64 points to 1,186.85. U.S. markets were weak for a second day even as a new report showed productivity surged in the second quarter. The Dow Jones industrial average moved 30.5 points lower to 9,307.4 after losing 32 points on Monday. The Nasdaq composite index gained 5.56 points to 1,986.68 while the S&P 500 index slipped 3.9 points to 1,003.2 after the U.S. Labour Department said Tuesday that productivity, the amount of output per hour of work, rose at an annual rate of 6.4 per cent in the April-June quarter, while unit labour costs dropped 5.8 per cent. Both results were greater than economists expected. The Fed starts its scheduled two-day meeting on interest rates Tuesday. The central bank is expected to keep its interest rate unchanged at near zero per cent. But investors will be looking to see if the Fed sounds a note of cautious optimism in its accompanying statement and whether it has plans to expand its asset-purchasing program now that funds are running dry. The gold sector was the biggest percentage advancer, up 0.7 per cent as the December bullion contract added 80 cents to US$947.70. The base metals sector was down slightly as the September copper contract edged up one cent to US$2.78 In earnings news, hardware and home improvement retailer Rona Inc. (TSX:RON) says a drop in housing starts led to a seven per cent dip in second-quarter sales and a reduction in profits for the period. Rona booked profits of $60.8 million, down from $76.6 million a year ago and its shares declined 19 cents to $14.14. Tissue maker and cardboard producer Cascades Inc. (TSX:CAS) said Tuesday it turned a profit of $30 million during the second quarter despite a modest dip in sales. The showing reversed a year-earlier loss of $25 million and its shares jumped 40 cents to $5.70. Pharmaceutical company AEterna Zentaris Inc. (TSX:AEZ) said Tuesday lower expenses helped offset a dip in revenues during the second quarter as the company trimmed its net loss to $13.1 million from $20.6 million. Its shares fell 16 cents to $2.88. Crocotta Energy Inc. (TSX:CTA) said low commodity prices and reduced production led to a sharp drop in oil and gas sales in the second quarter as the company swung to a loss of $3.2 million for the period. The Calgary-based company reported profits of $3.4 million a year ago and its shares were unchanged at $1.10. Asian markets advanced as China's industrial output, trade and retail sales improved in July, data showed Tuesday, in positive signs for Beijing's multibillion-dollar effort to restore stable growth in the world's third-largest economy. Hong Kong's Hang Seng closed up 0.7 per cent while Japan's Nikkei 225 stock average rose 0.6 per cent as the Bank of Japan said there were signs the downturn was bottoming out but warned about growing joblessness. London's FTSE 100 index dipped 0.5 per cent, Frankfurt's DAX was down 0.9 per cent while the Paris CAC 40 lost 0.7 per cent.

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