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Investors to stay focused on economic outlook this week after mixed jobs data

TORONTO - Investors will be looking for more signs of recovery in the U.S. and Canadian economies this week after mixed results on the latest employment numbers left stock markets weaker.

While Canadian jobs figures came in above expectations on Friday, data from the U.S. showed that growth momentum trailed off in March, raising more questions about whether the pace will slow in the coming months.

North American markets pulled back after the jobs figures were released, closing relatively flat on the week.

The Dow Jones industrials moved ahead 0.5 per cent, while the Nasdaq dropped 0.7 per cent on a major plunge of 110 points on Friday.

Toronto's S&P/TSX composite index was the biggest gainer, up 0.9 per cent.

Traders have been looking for reassurance that the U.S. economy is solid, despite key economic data throughout last week that pointed to reasons for confidence. The hesitation to move higher has raised questions about whether stock markets are headed towards a correction in the coming months.

"The markets had been climbing for several days on anticipation of a strong jobs report," said Colin Cieszynski, a senior markets analyst at CMC Markets.

"The employment report itself was not too bad, it was a little bit below expectation... (but) wasn't good enough to really push the markets significantly higher."

This week, traders will turn their attention to the release of minutes from the Federal Reserve meeting on Wednesday in hopes of further insight.

On Monday, the Bank of Canada will release its first-quarter business outlook survey which is expected to show that winter storms hurt growth during the first three months of the year.

Canadian employment figures for March impressed as the unemployment rate pulled back one-tenth of a point to 6.9 per cent — though it was on the back of part-time jobs and the hiring of younger Canadians.

"The Canadian economic landscape has improved materially in recent weeks, silencing any talk of possible Bank of Canada rate cuts," wrote BMO Capital Markets senior economist Benjamin Reitzes.

He pointed toward the likelihood of accelerated inflation, a rebound of GDP growth in the second quarter, and signs of life in trade figures as reasons to remain optimistic.

"Things are looking up as we finally head into spring," he said.

Also on the calendar are Canadian housing starts on Tuesday, which are expected to stay resilient against concerns that the market is nearing a dropoff. Consensus expectations suggests there were 193,000 new home starts in March.

With few other key indicators, the spotlight will turn to prospects for businesses in the coming months.

Aluminum producer Alcoa Inc. reports its financial results on Tuesday while financial services heavyweights Walls Fargo and JP Morgan issue results on Friday.

"Earnings estimate revisions for the most part have been negative and companies have been guiding down," said Kevin Headland, director of the portfolio advisory group at Manulife Asset Management.

"Whether they're guiding down because they really believe things are more difficult, or they're guiding down to lower expectations so they have an easier beat, I think that's going to be the interesting thing to look at."

Several Canadian companies will report their latest financial results, including Dollarama Inc. (TSX:DOL) and Cogeco Inc. (TSX:CCA) on Wednesday and Shaw Communications Inc. (TSX:SJR.B) on Thursday.

The Canadian Press

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