Fiscal cliff fears bring markets down

The Toronto stock market was lower Thursday as gold stocks were weighed down and concerns developed over comments made at the federal budget talks in Washington.

The S&P/TSX composite index fell 63.92 points to end the session at 12,289.17, with commodities-heavy sectors contributing most to the decline. The TSX Venture Exchange was off 11.35 points to 1,174.01.

The Canadian dollar fell 0.01¢ to US101.54¢.

The TSX gold sector fell 2.8% as February bullion dropped against the U.S. dollar. The contract fell $21.00 to close at US$1,695.60 an ounce.

Goldcorp Inc. shares dropped 3.2%, or $1.22, to $36.41.

Crude oil prices for January backed off 88¢ to US$85.89 a barrel on the New York Mercantile Exchange, helping to pull down the energy sector 0.5%.

And copper prices also fell, with the March contract on the Nymex dropping 5.6¢ to US$3.66 a pound.

On Wall Street, the Dow Jones industrials dropped 74.73 points to 13,170.72, while the Nasdaq shed 21.65 points to 2,992.16 and the S&P 500 dropped 9.03 points to 1,419.45.

In Washington, House Speaker John Boehner said the White House was so resistant to cutting government spending that it risked pushing the country off the “fiscal cliff.”

President Barack Obama said a deal was “still a work in progress.”

The developments appeared to leave traders with mixed feelings.

“We all know they’re going to take it to the last minute,” said Allan Small, senior adviser at DWM Securities.

“If they could get something done prior to Christmas it would be fantastic. … Unfortunately it looks like they’re going to take this right to the wire.”

In U.S. economic data, the Commerce Department said Americans spent more on autos, electronics and building supplies in November, pushing retail sales up 0.3%. That offset a 0.3% decline in October.

And the U.S. Labor Department said fewer Americans applied for unemployment benefits last week, the fourth straight weekly decline. The seasonally adjusted figure of 343,000 was the lowest level in two months and the second-lowest this year.

The data on declining unemployment applications, which suggests companies are cutting fewer jobs, comes after the Federal Reserve for the first time tied its interest rate policy to unemployment as it aggressively attacks joblessness in the U.S.

The Fed said Wednesday it will keep its key short-term interest rate near zero at least until the unemployment rate drops below 6.5% and inflation rises to 2.5%.