New York indexes were lower as investors took in another warning of big losses in the U.S. financial sector and a reading on the economy that showed personal spending rose more than expected in the fourth quarter. Weekly claims for unemployment benefits also fell.

Toronto's S&P/TSX composite index moved down 39.93 points to 13,351.93 as investors stepped back following a sizzling four-day run that sent the TSX up almost 5 1/2 per cent.

"It's good to see that there is some stability in the marketplace, we're not giving those gains back, we're retaining those gains and we're not getting overextended," said Jennifer Dowty, portfolio manager at MFC Global Management.

"I'd be more concerned if there was another 200-point rally again today and then I would question the momentum. But this is exactly what you need to see today where we're digesting those gains."

The TSX Venture Exchange edged 13.37 points lower to 2,514.17 while the Canadian dollar was ahead 0.17 of a cent at 98.32 cents US.

New York's Dow Jones industrials declined 54.62 points to 12,368.24.

The Nasdaq composite index dropped 30.78 points to 2,293.58 after database software giant Oracle said quarterly profit jumped 30 per cent but sales fell short of expectations with a 21 per cent increase to US$5.35 billion. Traders were also unnerved by management's outlook. Its stock fell $1.57 to US$19.37.

The S&P 500 index moved 8.84 points lower to 1,332.29.

The U.S. Commerce Department said gross domestic product grew at a 0.6 per cent annual pace in the final quarter last year, unchanged from its estimate a month ago. Consumers increased buying at a 2.3 per cent pace, ahead of the 1.9 per cent growth rate estimated earlier.

The number of U.S. workers seeking jobless benefits fell last week by 9,000 to 366,000, better than the 371,000 reading that had been expected.

U.S. financials suffered after Oppenheimer analyst Meredith Whitney cut earnings expectations for investment bank Merrill Lynch and Swiss banking giant UBS, which she said "may suffer respective first-quarter writedowns of US$6.03 billion and US$11.06 billion." Shares in Lehman Bros. fell $2.54 to $39.95.

The Toronto financial sector fared better, rising 0.6 per cent. Bank of Montreal (TSX:BMO) rose 45 cents to $45.45.

The TSX energy sector rose a slight 0.12 per cent as oil prices improved on Wednesday's big runup of almost US$5 a barrel. The May crude contract on the New York Mercantile Exchange gained 35 cents to US$106.25 a barrel.

The Toronto market's base-metals sector moved ahead 1.5 per cent. Teck Cominco Ltd. (TSX:TCK.B) and Inmet Mining Corp. (TSX:IMN) have signed a deal to develop the Petaquilla copper project in Panama where expected costs have more than doubled. Teck shares gained $1.26 to $43.16 while Inmet moved down seven cents to $77.

Stock in specialty metals producer Timminco Ltd. (TSX:TIM) jumped $5.59 or 26.8 per cent to $26.48 after it signed a deal to supply solar grade silicon to Q-Cells AG, the world's largest manufacturer of solar cells.

The TSX was held back by a 1.66 per cent drop in the gold sector as the April bullion contract on the Nymex moved down $2.30 to US$946.90. Kinross Gold (TSX:K) faded 31 cents to $23.37.

Investors were also pleased to see progress in closing a US$19.5-billion buyout of U.S. radio station owner Clear Channel Communications Inc.

The company said a Texas judge has barred banks from taking steps that would "interfere or thwart" the deal. Clear Channel had sought the order in a lawsuit Wednesday as the banks were said to be backing away from their commitment to finance the deal.

Concerns about the deal renewed doubts about the buyout of BCE Inc. (TSX:BCE) by a group led by the Ontario Teachers' Pension Plan.

Investors were awaiting a decision after the close of financial markets by the Canadian Radio-television and Telecommunications Commission on whether to approve the BCE takeover. BCE shares were up 32 cents to $36.04.

Canadian-based international film distributor Entertainment One (LSE:ETO) has struck a Canadian distribution deal with U.S. independent studio ThinkFilm. Financial terms of the two-year agreement were not revealed.

In overseas activity, China's benchmark stock index tumbled 5.4 per cent to its lowest close in almost a year, pulled down by PetroChina and other large stocks.

The Shanghai composite fell 195.36 points to 3,411.49. as PetroChina, representing one-fifth of the index, dropped 8.3 per cent on the day, down 22 per cent on the past week and 65 per cent from its peak.

"With PetroChina dragging down the index and with bearishness spreading, there's no bottom in sight," said Zhou Lin, an analyst with Huatai Securities.

Tokyo's Nikkei average was down 102.05 points or 0.8 per cent to 12,604.58, while the Hang Seng in Hong Kong edged up 0.2 per cent.

London's FTSE 100 index was up 25.2 points to 5,685.6, the German DAX 30 rose 62.09 points to 6,551.35 and the Paris CAC 40 grew 22.19 points to 4,698.87.