Markets reverse earlier losses to close higher

North American stock markets reversed earlier losses Wednesday to break recent losing streaks, while gold closed at a record high as investors continued to seek a safe haven.

Gold closes at record high

Traders works on the floor of the New York Stock Exchange on Wednesday. (Andrew Burton/Getty)

North American stock markets reversed earlier losses Wednesday to break recent losing streaks, while gold closed at a record high as investors continued to seek a safe haven.

The S&P/TSX composite index recovered from earlier lows, when it was down almost 185 points to close with a gain of 63.71 points, or 0.5 per cent, at 12,816.03.

In New York, the Dow Jones industrial average also recovered from earlier losses of as much as 166 points, snapping an eight-day losing streak to finish up 29.82 points, or 0.3 per cent, at 11,896.44. The Nasdaq rose after three days of losses, up 23.83 points, or 0.89 per cent, to 2,693.07, and the S&P 500 composite index was up 6.29 points, or 0.5 per cent, to 1,260.34.

Bullion for December delivery rose as much as $31.40, or 1.9 per cent, to $1,675.90 US an ounce. It reached a record close, up $21.80 at $1,666.30.

Gold has gained steadily this year as investors looked for a safe haven amid concerns about slowing growth in the global economy and Europe's debt crisis.

Vancouver-based Citizens Bank of Canada noted that governments themselves have been buying gold as traders move away from the U.S. dollar and the euro.

"Sovereigns themselves have been noted as buyers of gold for their reserves as central bankers hedge against their depreciating foreign currency reserves," it said in a commentary.

The Canadian dollar was down 0.25 of a cent to 103.89 cents US.

New York markets fell even as payroll processor ADP said that private U.S. companies added 114,000 jobs last month. That number was slightly higher than Wall Street's estimates. It was the 20th straight month that small businesses added jobs.

But another report released Wednesday by Challenger, Gray & Christmas suggested that firms announced the largest number of planned job cuts in 16 months in July, climbing by 59 per cent from the same month a year earlier.

And the Commerce Department said U.S. factory orders for airplanes, autos and heavy machinery fell 0.8 per cent in June, lowering demand for factory goods for the second time in three months.   

Swiss cut rates

In a surprise announcement, the Swiss National Bank cut its main interest rate to halt a sharp rise in the franc, another safe haven investment.

The Swiss central bank, saying the currency was "massively overvalued," lowered its target range for interest rates on lending between banks to zero to 0.25 per cent from zero to 0.75 per cent.

Lowering interest rates cuts the return on holding a particular currency compared with others by lessening demand for investments and assets in that currency.

The bank also said it would "very significantly" increase liquidity into the Swiss franc money market and warned that the recent appreciation of the currency has dented the economy's prospects.

Oil fell to its lowest level in five weeks with the September contract for benchmark West Texas Intermediate crude dropping $1.86 to close at $91.93 US a barrel on the New York Mercantile Exchange.

Jobs numbers come Friday

Stock markets tumbled on Tuesday after a run of grim U.S. economic data stoked fears that the world's largest economy is growing far slower than anticipated and may be heading back toward recession.

A weak manufacturing survey from the Institute for Supply Management on Monday brought those concerns to the fore and were reinforced by another report Tuesday which showed that Americans cut back on their spending in June for the first time in nearly two years.

Markets will be watching closely on Friday, when the U.S. announces job creation figures for July. Canada's employment statistics come out the same day.

European markets were also in the red as Italy's borrowing rates touched a new euro-era high Wednesday as a Tuesday's market sell-off reignited fears that the debt crisis will engulf the eurozone's third-largest economy, and despite eurozone retail sales figures showing a surprisingly big 0.9 per cent rebound in June.

London's FTSE 100 index and Frankfurt's DAX dropped 2.3 per cent  while the Paris CAC 40 was down 2.1 per cent.

Asian markets followed North American markets lower overnight as Tokyo's Nikkei 225 slid 2.1 per cent, Hong Kong's Hang Seng shed 1.9 per cent, South Korea's Kospi tumbled 2.6 per cent and China's Shanghai Composite Index edged down by about 0.1 per cent.

With files from The Canadian Press and The Associated Press