The S&P/TSX composite index dropped 57.64 points to 12,316.12 as the clock ticked towards huge spending cuts and significant tax increases that will automatically click in after Dec. 31 if there is no deal.
The American economy is already weak and economists warn that the imposition of those measures could tip the U.S. back into recession and depress other economies around the globe unless the White House and Congress find a compromise budget plan.
Traders had looked forward to a mid-afternoon meeting at the White House for last-minute talks. But losses deepened in the last minutes of the session amid reports that Obama was not presenting a new budget offer to congressional leaders.
North American markets lost ground this shortened trading week as top U.S. lawmakers continued to cast blame on each other for the fiscal-cliff impasse while portraying themselves as open to a reasonable last-minute bargain.
The TSX declined 0.56 per cent while the Dow industrials gave back 1.9 per cent.
“I can’t wait till this is done, so we can start talking about markets again and not just about politics,” said Doug Cote, chief market strategist at ING Investment Management. Cote added that he doesn’t expect lawmakers will manage to reach a deal before the deadline.
Commodities were lower and February bullion declined $ 7.80 to $ 1,655.90 (U.S.) an ounce while the gold sector declined about one per cent. Barrick Gold Corp. faded 36 cents to $ 33.88 (Canadian) while Goldcorp Inc. dropped 53 cents to $ 35.45.
March copper closed down a penny at $ 3.59 (U.S.) a pound. The mining sector fell 0.35 per cent with Teck Resources down 52 cents at $ 35.07 (Canadian), while First Quantum Minerals gave back 29 cents to $ 21.20.
The energy sector dropped 0.47 per cent as February crude on the New York Mercantile Exchange slipped seven cents to $ 90.80 (U.S.) a barrel. Suncor Energy declined 40 cents to $ 32.22 (Canadian) while Talisman Energy shed 16 cents to $ 11.01.
On the corporate front, Research In Motion Ltd. shares climbed five cents to $ 11.75. The BlackBerry maker has sold NewBay to mobile services company Synchronoss Technologies Inc. for $ 55.5 million (U.S.). NewBay’s cloud-based services allow customers to store, share and deliver content like photo albums, social networking and other data through smartphones, tablets and other electronic devices.