TORONTO - Mining stocks led the way to a flat close on the Toronto stock market Friday as latest snapshot of the U.S. economy showed a sharp drop off in job creation and further cemented the view that the U.S. economy is rapidly slowing.

The S&P/TSX composite index was well off early lows, down 1.59 points to 13,517.91. The main index had initially plunged as much as 154 points after the U.S. Labour Department reported that the economy only created 54,000 jobs during May -- about a quarter of what was expected just a week ago. The jobless rate edged up 0.1 of a percentage point to 9.1 per cent.

The TSX Venture Exchange was down 2.4 points to 2,055.62.

The bad news from Canada's largest trading partner sent the loonie down 0.28 of a cent to 102.22 cents US, off the worst levels of the session as the U.S. currency continued to weaken.

Much of the bad employment news had been priced in two days ago after the ADP payrolls firm said that private employers in the U.S. only added 38,000 jobs during the month -- much less than the 175,000 expected.

Equity markets registered triple-digit losses, the loonie lost 3/4 of a US cent and many traders dramatically dropped their expectations for May employment growth.

"Anybody that has been paying attention to the data has been looking and seeing a moderation in growth and that is not to be unexpected," said John O'Connell, CEO of Davis Rea Ltd., adding he's surprised the market has been so resilient to other negative news recently.

The showing on the TSX left the market more than 800 points below its recent high reached in early March, but O'Connell doesn't think this warns of a serious slump.

"We're also not saying we're going into the garbage dump here."

The tech sector led decliners with BlackBerry maker Research In Motion Ltd. (TSX:RIM) down $1.33 to $38.15.

Base metal prices ticked higher with the July copper contract up five cents at $4.13 a pound after three days of losses, but the base metals sector moved down 1.04 per cent. First Quantum (TSX:FM) fell $2.56 to $123 and Ivanhoe Mines (TSX:IVN) lost 97 cents to $22.93.

The energy sector was the strongest sector, up 0.51 per cent as declines in oil prices moderated after concerns that a weaker U.S. economy will translate into lower demand sent crude close to the US$98 level earlier. The July oil contract on the New York Mercantile Exchange was later down 18 cents to US$100.22 a barrel amid U.S. dollar weakness. Suncor Energy (TSX:SU) advanced 47 cents to C$39.60 while Cenovus Energy (TSX:CVE) climbed 83 cents to $34.96.

The gold sector was also higher as precious metal prices took off following the jobs data with the August bullion contract up $9.70 to US$1,542.40 an ounce. Goldcorp Inc. (TSX:G) added 40 cents to $47.98.

Losses were steep in New York where the Dow Jones industrial average fell 97.29 points 12,151.26.

The Nasdaq composite index lost 40.53 points to 2,372.58 while the S&P 500 index dropped 12.78 points to 1,300.16.

The European debt crisis was also on the minds of traders.

Debt inspectors from the European Union and the International Monetary Fund said Greece should receive the next euro12 billion tranche of its existing euro110 billion bailout as long as additional austerity and privatization measures are deemed sufficient. Greece also had to accept unprecedented outside interference in the way it runs its government services.

On the corporate front, Sino-Forest Corp. (TSX:TRE) fell a further $9.23 or 63.83 per cent to $5.23 on heavy volume of 41.5 million shares on top of a 20 per cent slide Thursday. The tumble was triggered after a U.S. financial analyst accused the company of wildly exaggerating its assets and fabricating sales transactions. On Friday, the company denied the allegations and said it has appointed an independent committee of directors to investigate the allegations made by Muddy Waters Research.

Microwave data transmission technology specialist DragonWave Inc. (TSX:DWI) has cuts first-quarter revenue expectations to US$11 million from a prior prediction of $15 million. The revision came after one customer deferred a "significant" shipment of equipment and another suffered regulatory delays. Its shares fell 31 cents to $5.79.

Grande Cache Coal Corp. (TSX:GCE) says its fourth-quarter profits rose to $5.1 million or five cents per share, an increase from $1.4 million, or a penny per share in the same period a year ago. Revenue was $67.3 million, up from $50.7 million and its shares were off a penny at $7.99.

Wal-Mart Stores Inc. has unveiled a US$15 billion share repurchase program as it seeks to reassure shareholders at its annual meeting that the world's largest retailer is still growing. While international sales are sizzling, the company is still trying to reverse a two-year sales slump at home in the United States. Wal-Mart shares edged up 11 cents to US$53.66.