Stock markets tread water while investors question direction

TORONTO - Stock markets struggled to keep their head above water throughout the early afternoon as investors questioned if it was time to pick up the pieces or continue to drive markets lower.
The S&P/TSX composite index was essentially flat, up 10.18 points to 7,733.31, after gaining as much as 321 points earlier in the session.
The gold index was the major gainer, up 22 per cent, as the December bullion contract increased $51.80 to US$800.50. Barrick Gold Corp. (TSX:ABX) was ahead $7.10 to $33.83.
The mining index rose 12.6 per cent. Energy stocks were also higher, up 2.5 per cent as the December crude contract rose 44 cents to US$49.86 per barrel.
Bank and insurance stocks crumbled 5.1 per cent as TD Bank (TSX:TD) shares continued to decline, down a further eight per cent to $40.13. The bank disclosed Thursday a $350 million in quarterly credit trading losses.
Since the end of last week, TD's shares have fallen 26 per cent from $53.57.
The beaten-down Canadian dollar - which plunged 2.52 cents Thursday - was at 77.61 cents US, up 0.30 of a cent after Statistics Canada reported the headline inflation rate eased last month to 2.6 per cent, from 3.4 per cent in September.
Wall Street stocks also face a volatile session with the Dow Jones industrial average rose 41.89 points to 7,594. The Nasdaq composite was behind one point at 1,315 and the S&P 500 moved up 4.14 to 757.
The market is digesting a Wall Street Journal report that Citigroup Inc. is considering selling all or part of itself following a plunge in its stock price - 26 per cent on Thursday alone.
HudBay Minerals Inc. (TSX:HBM) and Lundin Mining Corp. (TSX:LUN) plan to merge in an all-stock deal worth $814 million, based on current market prices. HudBay shares were down 41 per cent to $3.10 and Lundin rose 11 per cent to $1.12.
In earnings, Sears Canada Inc. (TSX:SCC) reported a third-quarter profit of $68.9 million as same-store sales increased 0.9 per cent from the comparable period a year ago despite a tough retail environment. Its shares fell 35 cents to $16.19.
Catalyst Paper Corp. (TSX:CTL) fell four cents to 26 cents after the company announced a tentative four-year contract agreement with the Communications, Energy and Paperworkers Union of Canada at its B.C. pulp and paper operations.
Research in Motion (TSX:RIM) shares were ahead 54 cents to $54.53 on the day the company debuts the BlackBerry Storm touch-screen mobile device in North America - a product intended to steal market share from Apple Inc.'s iPhone.
The decrease in selling pressure on Friday was somewhat expected with key markets sliding drastically in recent sessions.
On Thursday, Toronto's main index dropped nine per cent or more than 750 points at its lowest level since October 2003, and down 49 per cent from its June peak of 15,073.