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* TSX falls 121.01 points, or 0.98 percent, to 12,240.19 * All 10 sectors lower, led by energy shares * Agrium drops nearly 10 percent By Claire Sibonney and John Tilak TORONTO, Nov 7 (Reuters) - Canada's main stock index slumped to a near two-week low on Wednesday, dragged down by the energy sector, as the market wondered if newly re-elected U.S. President Barack Obama could tackle the significant economic challenges facing the country. While Obama promised to reach across the aisle to address these issues, investors were skeptical of a speedy resolution on the "fiscal cliff" - a mix of tax increases and spending cuts due to extract some $600 billion from the economy starting Jan. 1 barring a deal. "Now that the distraction of the U.S. elections is over, investors are again focusing on the two biggest threats to global growth - the U.S. fiscal cliff and the euro zone situation," said Elvis Picardo, strategist and vice president of research at Global Securities. The fiscal cliff "is a huge concern. There doesn't seem to be any indication of a near-term solution," he said. At midafternoon, the Toronto Stock Exchange's S&P/TSX composite index was down 121.01 points, or 0.98 percent, at 12,240.19. The index, which hit its lowest level since Sept. 25, at one point fell to 12,201.87. All the main subgroups were down. Leading the decline was the energy subgroup, which fell 1.92 percent on a day when oil prices were down. Suncor Energy Inc fell 2.69 percent to C$33.66 and Canadian Natural Resources Ltd was down 3.11 percent at C$29.26. "Temporarily you're going to see weakening demand for commodities. And that's being reflected in the market today," said Michael Sprung, president at Sprung Investment Management. Though the United States could eventually approve the Keystone pipeline, having the Democrats in power may push it further into the future, Sprung said. Weighing on broader sentiment, European Central Bank President Mario Draghi underscored the weakness in Europe's economy. Some Canadian earnings reports also dampened the mood. One of the heaviest decliners on the index was fertilizer producer Agrium Inc, down nearly 10 percent at C$96.30, after it reported lower quarterly profit due to downtime at its potash mine and dragged-out contract talks with China and India. Bombardier Inc dropped 3.6 percent to C$3.48 after it said it would delay by about six months the first flight of its C-Series jetliner because of issues related to suppliers, and that it would cut about 1,200 jobs in its train manufacturing division. Enbridge Inc was down 1.37 percent at C$39.54. Canada's second-largest pipeline company reported a third-quarter profit as losses on financial derivatives fell and it carried more oil and natural gas on some of its pipelines. However, shares of Franco-Nevada Corp were up 4.62 percent at C$58.64 after the gold-focused royalty company said on Tuesday it would buy an 11.7 percent net royalty interest in an oil field in Saskatchewan from Penn West Petroleum Ltd for C$400 million in cash.