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North American markets pull back sharply on disappointing GDP reports

North American stock markets closed deeply in the red in a broad-based decline that followed the release of disappointing economic growth figures on both sides of the border.

The S&P/TSX composite index finished the last trading day of May down 92.91 points at 15,014.09, with the energy sector helping to limit the damage as oil prices turned sharply higher. The loonie lost 0.01 of a U.S. cent to 80.41 cents.

Statistics Canada says the economy contracted at an annual pace of 0.6 per cent in the first three months of the year as weaker oil prices had a more severe impact than economists expected.

It is the first time real GDP growth has dipped below zero since the fourth quarter of 2011 and the biggest slide into negative growth since the second quarter of 2009.

The U.S. economy also contracted in the first quarter with gross domestic product weakening 0.7 per cent, far worse than the government’s initial estimate of growth of 0.2 per cent. The Dow Jones industrial average closed down 115.44 points at 18,010.68, while the Nasdaq fell 27.95 points to 5,070.03 and the S&P 500 declined 13.40 points to 2,107.39.

In commodities, oil prices got a boost after data showed U.S. crude oil inventories declined more than anticipated. The July crude contract rose $2.62 to US$60.30 a barrel and the energy sector rose 0.60 per cent. Meanwhile, August gold gained $1 to US$1,189.80 an ounce.