Source: The Canadian Press

The Toronto stock market closed lower for a second session Wednesday with investors selling stocks across most sectors amid the latest round of worries about Europe’s debt crisis.

The S&P/TSX composite index dropped 51.01 points to 13,229.07, while the TSX Venture Exchange slipped 16.76 points to 2,100.94.

The Canadian dollar was 0.25 of a cent higher at 99.6 cents US.

Government debt worries were back in focus after Spain was warned it may have its credit rating downgraded.

Moody’s Investor Services put Spain’s Aa1 rating on review for possible downgrade because of its high refinancing needs in 2011, a potential rise in its debt burden and increased concerns over the ability of the government to get its public finances into shape.

“We’ve seen over the last few weeks this see-saw back and forth between worries about what’s going on in Europe and the fact that U.S. and some Canadian data has been coming in stronger than expected,” said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

“When the worries from abroad overwhelm the domestic strength you see the market pull back. But I think that even though we’ve actually seen pretty good gains for the past couple of weeks (Europe has) sort of kept it from being better.”

Rival agency Standard & Poor’s delivered a similar warning to Belgium on Tuesday, which also made investors nervous that the debt crisis might spread following the earlier bailouts of Greece and Ireland.

The base metals sector declined 1.7% as metal prices lost ground with the March copper contract on the Nymex down eight cents at US$4.13 a pound. Teck Resources (TSX:TCK.B) shed $1.31 to C$56.54 while Taseko Mines (TSX:TKO) stepped back 17 cents to $5.05.

Gold stocks also retreated as the February gold contract in New York declined $18.10 to US$1,386.20 an ounce. Barrick Gold Corp. (TSX:ABX) lost 78 cents to C$52.75 while Eldorado Gold (TSX:ELD) faded 40 cents to $18.11.

Oil prices turned around following the release of data from the U.S. Energy Department showing that oil inventories fell more than expected last week.

The January crude contract on the New York Mercantile Exchange gained 34 cents to US$88.62 a barrel, but the energy sector fell 0.29%. On the TSX, Canadian Natural Resources (TSX:CNA) dropped 43.5 cents to C$42.50 and Imperial Oil (TSX:IMO) was down 44 cents at $38.28.

Defensive sectors fared best on the TSX with the utilities sector ahead 0.76% as Canadian Utilities Ltd. (TSX:CU) rose $1.01 to $53.49.

The consumer staples sector ran ahead 0.59% with Shoppers Drug Mart (TSX:SC) ahead 88 cents at $38.68.

New York markets lost early momentum gained from an encouraging report on U.S. industrial production as worries over Europe’s debt crisis pushed the dollar higher. Bond prices fell, sending long-term interest rates higher again.

The stronger dollar hurts U.S. companies that do a lot of business overseas.

The Federal Reserve said that output by U.S. factories, utilities and mines increased 0.4% last month, after falling 0.2% in October. Factories produced 0.3% more goods for consumers and businesses, after boosting output by the same amount a month earlier. The strongest factory gains came from big-ticket items expected to last for several years.

New York’s Dow Jones industrial average was down 19.07 points at 11,457.47.

The Nasdaq composite index fell 10.5 points to 2,617.22 while the S&P 500 index slipped 6.36 points to 1,235.23.

In corporate news, PotashCorp (TSX:POT) chief executive Bill Doyle sees rising demand for food around the world pushing farmers to increase fertilizer demand and drive his business. The update by Doyle at the Bank of America Merrill Lynch investor conference in New Yiork was his first since BHP Billiton walked away from its hostile bid for the company. PotashCorp shares were up $1.69 at $139.69 on the TSX.

Fertilizer company Agrium Inc. (TSX:AGU) said it has reached an agreement to sell the commodity management business of AWB Ltd., the Australian agricultural firm it recently acquired for $1.2 billion. The exact purchase price wasn’t disclosed. Agrium said “the purchase price to be paid by Cargill will be the net asset value of the acquired businesses as at the completion date of the transaction plus a premium.” Agrium shares were off 40 cents at $81.12.

Russian uranium miner JSC Atomredmetzoloto (ARMZ) is buying Mantra Resources Ltd. (TSX:MRL) for about $1.16 billion. The state-owned Russian miner has given an option to Uranium One Inc. (TSX:UUU), in which ARMZ holds 30% stake, to buy out Mantra within a year. Mantra shares rose 29 cents to $7.88 while Uranium One shares lost 19 cents to $4.50.

MTS Allstream, a business unit of Manitoba Telecom Services Inc. (TSX:MBT), said in its financial outlook that it expects to cut costs by $25 million to $35 million in 2011, with restructuring costs to be $10 million. Manitoba Telecom shares climbed 18 cents to $28.65.