The Toronto stock market finished sharply lower Tuesday as the resource-heavy TSX was hit by sliding commodity prices as the U.S. dollar strengthened and investors also worried about downgrades to government credit ratings.
The S&P/TSX composite index dropped 120.7 points to 11,368.93 as the Bank of Canada said it was leaving interest rates unchanged at 0.25 per cent.
The Canadian dollar was down 0.99 of a cent to 93.99 cents U.S. The central bank warned that the main risks to an economic rebound are "a more protracted global recovery and persistent strength in the Canadian dollar that could act as a significant further drag on growth and put additional downward pressure on inflation."
Investor sentiment took a knock after Moody's Investor Services warned that the United States and Britain must get a grip on their public finances to avoid threats to their top Triple-A credit ratings.
And Moody's again downgraded six state-linked companies in Dubai as fresh concerns surfaced about the troubled Arab boomtown's debt woes.
Financials were lower as the Bank of Nova Scotia missed earnings expectations.
Scotiabank shares were down $1 to $47.61 as the bank reported net income of $902 million or 83 cents per share for the fourth quarter, up from year-ago profit of $315 million or 28 cents per share.
Analysts had expected 87 cents a share. Overall, the financials sector slipped just under one per cent with CIBC down $1.08 to $69.14.
The gold sector was down 2.75 per cent. A stronger American currency pushed the February gold contract on the New York Mercantile Exchange down $20.60 to close at US$1,143.40 an ounce.
Barrick Gold Corp. faded $1.53 to $43.10 and Goldcorp Inc. stepped back $1.32 to $42.24.
All sectors were lower save for gains in the industrial and tech components. Research In Motion Ltd. climbed $1.69 to $65.09 and Canadian Pacific Railway rose $1.45 to $55.79.
The TSX Venture Exchange was down 32.16 points to 1,402.24.
New York markets also fell with the Dow Jones industrial average falling 104.14 points to 10,285.97, the tech stock heavy Nasdaq composite index declined 16.62 points to 2,172.99 while the S&P 500 index moved down 11.32 points to 1,091.93.
