Fading hopes for fiscal cliff deal to depress North American stock markets

TORONTO – The Toronto stock market headed for a lower open amid growing skepticism about whether American lawmakers can keep the economy from going over the so-called fiscal cliff.

The clock is ticking towards huge spending cuts and significant tax increases that will automatically click in after Dec 31 if there’s no deal. The American economy is already weak and economists warn 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.

The Canadian dollar was little changed, off 0.01 of a cent to 100.5 cents US.

U.S. futures were lower with the Dow industrials down 49 points to 12,954, the Nasdaq futures dropped 9.5 points to 2,613 and the S&P 500 futures declined 6.5 points to 1,404.25.

Congressional leaders and President Barack Obama are expected to meet later Friday at the White House for last-minute talks. Obama and congressional Democrats want a deal that would let tax rates rise for the wealthiest taxpayers, a measure opposed by Republicans.

The TSX closed little changed Thursday while New York indexes were lower as top lawmakers alternately cast blame on each other while portraying themselves as open to a reasonable last-minute bargain.

Commodities were lower with February crude on the New York Mercantile Exchange off two cents to US$90.85 a barrel.

March copper dipped a penny to US$3.59 a pound while February gold declined $2.30 to US$1,661.40 an ounce.

Worries about the U.S. economy put European bourses firmly in the red with London’s FTSE 100 index down 0.35 per cent, Frankfurt’s DAX dropped 0.49 per cent while the Paris CAC 40 fell 0.92 per cent.

However, Asian markets advanced as Tokyo’s Nikkei 225 index rose 0.7 per cent to its highest level since March 10, 2011, the day that an earthquake and tsunami pummeled Japan’s northeastern coast.

Investors have been cheering newly named Japanese Prime Minister Shinzo Abe and his calls for more public spending to reinvigorate the economy.

Hong Kong’s Hang Seng rose 0.2 per cent, while South Korea’s Kospi added 0.5 per cent. Australia’s S&P/ASX 200 gained 0.5 per cent.