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TORONTO - North American markets split directions on Friday near midday as higher oil prices sent Toronto lower, but helped New York recoup earlier losses.

Toronto's S&P/TSX composite index was down 110.48 points to 13,274.69 after falling as much as 162 points earlier in the session. The TSX energy sector was down 3.3 per cent as the price of light, sweet crude fell $4.18 to $115.84 in trading on the Nymex.

On Wall Street, the Dow Jones industrial average gained 179.94 points to 11,611.37.

The Nasdaq composite index moved up 33.88 points to 2,389.61, while the S&P 500 index jumped 16.13 of a point to 1,282.20.

Statistics Canada says the July unemployment rate was 6.1 per cent, down one-tenth of a percentage point from June, but only because fewer people were in the workforce. There were actually 55,000 fewer people working in July in Canada than in the previous month.

The latest unemployment numbers showed the worst monthly loss in 17 years, with the majority of the declines from fewer part-time jobs.

"Corporate Canada is beginning to think the worst, and the result has been a summer crop of pink slips," said Avery Shenfeld, senior economist at CIBC World Markets in a note.

"The jobs trend is consistent with weak positive growth at best, and our call for a roughly one per cent gain in real output is in line with that reality, and perhaps a tad optimistic."

The Canadian dollar continued its decline, dropping 1.27 cents to 93.70 cents US, near its lowest levels since last August.

The TSX gold sector fell 3.3 per cent as the December bullion contract dropped $18 to $859.90 on the New York Mercantile Exchange.

NovaGold Resources Inc. (TSX:NG) has been hit with a lawsuit filed in New York by disgruntled investors who say they weren't given enough warning about problems at the now-halted Galore Creek mining project, which was stopped after the project's estimated cost soared to as much as $5 billion. Shares lost 36 cents to $7.08.

The TSX Venture Exchange slid 25.63 points to 2,104.56.

Investors appeared unfazed by the U.S. Labor Department's report showing that workers' efficiency grew at a slightly slower pace in the second quarter as companies sought to produce more with smaller work forces. But gains in wages and benefits also slowed. Keeping compensation in check can help contain inflation.

Swiss Bank UBS has reached a US$19.4-billion agreement to buy back bonds to settle claims that it misled investors into buying high-risk securities, according to the Massachusetts Secretary of State's office.

In earnings reports Friday, Air Canada's (TSX:AC.A) net profit dropped to $122 million, or $1.22 per share, from $155 million in the second quarter of 2007. Passenger revenue increases five per cent in second quarter over last year, while fuel expenses rose by $212 million. Shares dropped 15 cents to $5.76.

ACE Aviation Holdings Inc. (TSX:ACE.B), Air Canada's parent company, said net income was $830 million, boosted by $908 million in pre-tax gains from the sale of its remain stakes in Aeroplan (TSX:AER.UN) and Jazz (TSX:JAZ.UN). But the airline holding company recorded an operating loss of $2 million. Shares rose four per cent, or 54 cents, to $11.45.

Telus Corp. (TSX:T) shares gained $1.20 to $40.15 after the company said its net income in the second quarter was $267 million, up 5.5 per cent from a year earlier, while revenue was $2.4 billion, up eight per cent from a year earlier.

Paper manufacturer Domtar Corp. (TSX:UFS) reported a more than doubling of its second-quarter profit to $24 million or five cents per diluted share, up from $11 million or two cents per share a year earlier as sales increased by 3.5 per cent. Shares rose 43 cents to $6.08.