Stock markets stay focused on fiscal cliff in shortened trading day

TORONTO – The Toronto stock market inched lower in early trading as concerns about the U.S. government fiscal situation dominated attention ahead of the Christmas holiday.

The S&P/TSX composite index was down 2.18 points to 12,3383.52, in a shortened trading session that ends at 1 p.m. ET. The TSX Venture Exchange rose 5.24 points to 1,182.95.

The Canadian dollar was at 100.78 cents US, up 0.12 of a cent.

Gold stocks dropped 0.6 per cent with the February bullion adding 30 cents to US$1,660.40 an ounce. March copper was up 1.5 cents at US$3.55 a pound.

January crude contract on the New York Mercantile Exchange slid 36 cents to US$88.30 a barrel.

Attention continues to be focused on a deadline for U.S. politicians to avoid a combination of automatic tax increases and spending cuts that will go into effect in the New Year. There’s a fear that the U.S. economy could be pushed into a recession of it goes over the so-called “fiscal cliff.”

The Republican-dominated House has been at odds with the Democrat controlled White House and Senate over the best way to deal with the U.S. government’s huge deficits. The two sides have been unable to find a workable compromise.

On Wall Street, the Dow Jones industrials dropped 35.87 points to 13,154.97, the Nasdaq fell 8.38 points to 3,012.63 and the S&P 500 index was off 3.88 points at 1,426.27.

U.S. stock markets will also close early.

Key U.S. lawmakers are already predicting that much of their holiday season will be spent in Washington. Many believe that the most that will be achieved is a stop-gap measure to avoid the federal spending cuts and broad tax hikes that would take effect Jan. 1 if no budget deal is reached.

President Barack Obama said later Friday that he is “ready and willing” to get a big package done to deal with the fiscal cliff, adding there’s no reason not to protect middle-class Americans from tax increases.

Obama says he spoke Friday with House Speaker John Boehner and met with Senate Majority Leader Harry Reid. He says Congress should pass a plan to extend tax breaks for the middle class and extend unemployment benefits.

Obama says no one can get 100 per cent of what they want and there are “real consequences” to how they deal with the across-the-board tax increases and steep spending cuts scheduled to kick in Jan. 1. Economists fear the combination could deliver a blow to the U.S. economy.

Most markets across Europe were only open for half a day and will only re-open again on Thursday. German markets, and others, were closed for Christmas Eve.

Among those that were open, Britain’s FTSE 100 index of leading British shares closed up 0.2 per cent at 5,954.18 while the CAC-40 in France was down an equivalent rate at 3,652.61.

Earlier in Asia, Hong Kong’s Hang Seng, closed up 0.1 per cent at 22,531.51 while South Korea’s Kospi rose less than 0.1 per cent to 1,981.82. Japanese markets were closed for the Emperor’s birthday holiday.