The Toronto stock market was deep in the red Friday morning with investors opting for safety ahead of weekend developments that could set the tone for trading next week.The S&P/TSX composite index retreated 84.92 points to 11,507.21 in a broad-based decline while the TSX Venture Exchange fell 10.87 points to 1,285.22.The Canadian dollar slipped, even though data released Friday showed job creation continued in May and at a slightly better level than expected. The loonie fell 0.46 of a cent to 96.83 cents US as Statistics Canada reported the economy cranked out about 7,700 jobs, which was ahead of the 5,000 that economists had estimated.The dollar declined as traders avoided risky assets such as commodities and resource-based currencies such as the loonie.U.S. markets were also negative but off the worst levels of the session with the Dow Jones industrial average down 24.3 points to 12,436.66. The Nasdaq composite index declined 3.09 points to 2,827.93 and the S&P 500 index lost 3.52 points to 1,308.88.Going into the weekend, traders looked ahead to the latest trade and industrial data from China that might be even weaker than pessimistic forecasts expected.China has rolled out a series of measures to stimulate the economy after growth fell to a nearly three-year low of 8.1 per cent in the first quarter and April factory output grew at its slowest rate since the 2008 crisis. Private sector analysts expect this quarter’s growth to fall further as the Chinese government worked to bring inflation down from unacceptable levels.On Thursday, the Chinese central bank announced it was cutting a key rate by 0.25 of a point to help boost growth.Europe was also sharply in focus as the government debt crisis has now infected Spain and its banks, which are laden with billions of euros of toxic loans as a result of the collapsed housing sector.Expectations are rising that Spain’s leaders will have to seek an international bailout for banks, which credit agency Fitch estimates could reach C100 billion. According to unconfirmed reports in Reuters, Spain is set to request an aid package for banks on Saturday.However, Spain’s Deputy Prime Minister Soraya Saenz de Santamaria said Friday the government will not act until receiving evaluations from the IMF on Monday and then two independent auditors Spain has hired. The economy ministry said on its website the latter are expected by June 21 at the latest.Fitch cut the Spanish sovereign debt rating to BBB late Thursday, which is two notches above “junk”Expectations of weak Chinese data and a stronger U.S. dollar sent commodity prices sharply lower.A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.The TSX energy sector lost 1.37 per cent as the July crude contract on the New York Mercantile Exchange fell $1.88 to US$82.94 a barrel. Suncor Energy (TSX:SU) lost 32 cents to $29.The base metals group dropped 2.11 per cent as July copper contract declined nine cents to US$3.28 a pound. Teck Resources (TSX:TCK.B) dropped 47 cents to $32.08.The financial sector also weighed, down one per cent while TD Bank (TSX:TD) shed $1.07 to $78.01.The gold sector was ahead 0.56 per cent as the August bullion contract on the Nymex dropped $9.40 to US$1,578.60 an ounce. Barrick Gold Corp. (TSX:ABX) was ahead 36 cents to $40.15.The TSX dropped 41 points Thursday, ending a two day rally, after U.S. Federal Reserve chairman Ben Bernanke disappointed investors, saying that there would no immediate action to jump start the world’s largest economy.In an appearance before members of the U.S. Congress, Bernanke avoided giving any signals about what the Fed might do in response to a slowdown in hiring.European bourses were lower as London’s FTSE 100 index lost 0.7 per cent and Frankfurt’s DAX gave back 0.92 per cent even as Germany’s central bank raised its 2012 economic growth forecast for the country to one per cent, citing global growth and a boost to domestic demand from a healthy labour market and favourable financing conditions.The Bundesbank’s prediction Friday compared with its forecast last December of 0.6 per cent growth in gross domestic product this year.The Paris CAC 40 was down 0.84 per cent.Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling for a fifth straight trading day, shedding 0.5 per cent to close at the lowest level in more than two months.Elsewhere in Asia, Japan’s Nikkei 225 index fell 2.1 per cent and South Korea’s Kospi dropped 0.7 per cent.