December 28, 2012 / 2:42 PM / in 5 years

TSX closes weaker as U.S. budget talks struggle

TORONTO (Reuters) - Canada’s main stock index fell in thin trading on Friday as uncertainty surrounding U.S. budget discussions weighed on investor sentiment.

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch

President Barack Obama and top lawmakers met in a last-ditch attempt to craft a budget deal before the “fiscal cliff” - tax hikes and spending cuts that could send the country into recession - starts to kick in on January 1.

Sal Masionis, stockbroker at Brant Securities, said the negotiations pulled the index lower.

“Obviously there’s not going to be any major resolution,” he said. “They will try to make some kind of a small dent in the problem.”

After that, Masionis added, the U.S. federal debt limit will be a major problem.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 57.65 points, or 0.47 percent, at 12,316.12. It edged down 0.6 percent for the week.

“The volumes are quite low, and if you combine that with the short-term uncertainty of the ‘fiscal cliff’ in the United States it’s a real recipe for a downward market,” said Arthur Salzer, chief executive of Northland Wealth Management.

The materials sector, home to miners, pulled the market lower, led by gold stocks as the price of gold fell. The sector slid 0.8 percent.

Goldcorp Inc (G.TO) fell 1.5 percent to C$35.45, and Barrick Gold Corp (ABX.TO), the world’s top gold producer, was 1.1 percent lower at C$33.88. <GOL/>

The financial sector, the index’s biggest, was down 0.5 percent. Bank of Nova Scotia (BNS.TO) was down 0.9 percent at C$57.43, and Royal Bank of Canada (RY.TO) fell 0.5 percent to C$59.75.

Energy stocks slipped 0.5 percent, tracking a decline in oil prices. Suncor Energy Inc (SU.TO) was the most influential decliner, falling 1.2 percent to C$32.22. <O/R>

In company news, U.S. regulators temporarily suspended trading in Southridge Enterprises Inc SRGE.PK two days after the exploration company said it was forming a partnership with Kinross Gold Corp (K.TO), which Kinross denied. Kinross fell 1.5 percent to C$9.39.

Outside the index, Aeterna Zentaris Inc AEZ.TO closed up 15.3 percent at C$2.43 after the drugmaker said it had agreed with U.S. regulators on the design of a late-stage trial for its endometrial cancer treatment.

Editing by Matthew Lewis

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