Traders fear going over the fiscal cliff

The Toronto stock market closed little changed Thursday as traders continued to assess the chances of the United States going over the so-called “fiscal cliff.”

A double-whammy of tax increases and spending cuts, which threaten to erode the already weak U.S. economy, is set to click in on Jan. 1.

The S&P/TSX composite index added 2.97 points to 12,373.77 while the TSX Venture Exchange gained 11.15 points to 1,196.75.

The Canadian dollar was off US0.36¢ to US100.51¢.

Markets hit their worst levels of the session after Senate Majority Leader Harry Reid said the U.S. government appears headed over the fiscal cliff because of a lack of progress in negotiations between Republicans who control the House of Representatives and Democrats who control the Senate and White House.

But indexes recovered most of the losses late in the day on word the House will be back in session Sunday. It is unclear what legislation the House might consider Sunday, since Speaker John Boehner is insisting the Senate must make the next move.

“At the end of the day, this prevailing willthey-or-won’t they in Washington is causing a dip,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

“But it’s tough to read too much into anything given that volumes are exceptionally low. All the players aren’t in the game so to speak.”

The Dow Jones industrials lost 18.28 points to 13,096.31, as data showed fiscal cliff worries are spreading to consumers.

The U.S. Conference Board said its consumer confidence index fell this month to 65.1, from 71.5 in November, the second straight decline and the lowest level since August.

The survey showed consumers were slightly more optimistic about current business conditions and hiring, but their outlook for the next six months deteriorated to its lowest level since 2011

The Nasdaq composite index fell 4.25 points to 2,985.91 and the S&P 500 index declined 1.73 points to 1,418.09.

Other data showed the average number of Americans seeking unemployment benefits over the past month fell last week to the lowest level since March 2008.

The U.S. Labour Department said Thursday that weekly applications dropped 12,000 to a seasonally adjusted 350,000 in the week ended Dec. 22. The four-week average, a less volatile measure, fell to a nearly five-year low of 356,750.

On the Toronto market, losses were led by a 0.5% decline in the financials subgroup as moved down 26¢ to $26.35.

declined 72¢ to $83.27.