TSX sheds 86 points

The TSX Venture Exchange dipped 9.05 points to 1,513.1.

The Canadian dollar was up 0.15 of a cent to 95.52 cents US.

U.S. markets were closed for the Thanksgiving holiday.

The TSX gave up an early gain after French president Nicolas Sarkozy appeared to temper his calls for the European Central Bank to play a bigger role in solving the debt crisis.

At the end of a meeting with German Chancellor Angela Merkel and Italian Premier Mario Monti, he agreed to support a German effort to change EU treaties to improve the governance of the troubled eurozone. Germany believes that voluntary pledges by national governments are no longer enough to boost market confidence.

There have been calls for the ECB to deal with the crisis by declaring itself lender of last resort and printing money to buy the bonds of debt-laden eurozone countries. But both the ECB and the German government are loath to do that, warning that it lets the more profligate countries off the hook for their bad practices.

For the same reason, Germany has opposed the use of eurobonds which would be backed by the eurozone’s 17-member countries.

“I’m amazed that despite the visibility to this crisis being very good, and the buildup to it being very clear, there just isn’t any political will to fix it,” said Chris King, portfolio manager with Morgan, Meighen and Associates.

“At several stages, the crisis had the possibility of being ring fenced but people have chosen not to do that and as a result, the monster keeps growing. And it’s tougher to keep it on a leash.”

The TSX started the session off positive after Germany’s Ifo Institute reported that its monthly confidence index for Europe’s biggest economy rose slightly to 106.6 in November from 106.4 the previous month. Also, German gross domestic product growth in the third quarter met expectations of 2.5% on a year-to-year basis with gains mostly driven by exports.

The readings had earlier helped calm nerves in the markets, a day after Germany suffered one of its worst bond auctions since the creation of the euro in 1999.

Meanwhile, Fitch on Thursday downgraded Portugal to junk bond status, making it even more difficult for the bailed-out country to return to the bond markets.

Equity markets have been in a deep funk for all of November as investors grow increasingly impatient with the lack of political will to find a comprehensive solution to the debt crisis.

The Toronto market tumbled 223 points on Wednesday in the wake of a failed German bond auction and another warning that France may see its AAA credit rating downgraded.

Although German and French borrowing rates are well below the seven per cent level that eventually forced Greece, Ireland and Portugal into seeking financial bailouts, they have been rising markedly in recent days.

The financial sector fell 0.67% as traders fretted about the havoc the debt crisis could inflict on the region’s banks. CIBC (TSX:CM) lost 98 cents to $68.62 and Scotiabank (TSX:BNS) was off 44 cents to $48.35.

The TSX energy sector slipped 0.8% even as lower crude inventory figures for the U.S. supported oil prices.

Crude supplies fell by 6.2 million barrels last week and are about eight per cent below levels a year earlier, the U.S. Energy Department’s Energy Information Administration said Wednesday.

The January crude contract rose 86 cents in late afternoon electronic trading on the New York Mercantile Exchange to US$97.03 a barrel.

Imperial Oil (TSX:IMO) declined 98 cents to C$39.03 and Canadian Natural Resources (TSX:CNQ) gave back 25 cents to $34.74.

The gold sector also fell as bullion prices slipped with the December gold contract off 40 cents to US$1,695.50 an ounce. Barrick Gold Corp. (TSX:ABX) slipped 68 cents to C$49.55 while Kinross Gold Corp. (TSX:K) traded down 15 cents at $13.45.

The base metals sector was the main advancer, up 0.85% even as copper prices lost early momentum with the December copper contract unchanged at US$3.28 a pound. Quadra FNX Mining (TSX:QUX) gained 10 cents to $9.51 and First Quantum Minerals (TSX:FM) climbed 31 cents to $16.92.

Sherritt International Corp. (TSX:S) said its long-time chief executive, Ian Delaney, is retiring at the end of the year. Delaney will remain chairman of the Toronto-based mining company while Sherritt’s chief financial officer, David Pathe, will replace Delaney as CEO. Sherritt has a highly diversified mining business, which includes a major coal operation in Western Canada and a major nickel mine in Madagascar. Its shares were off one cent to $5.10.

European markets were mixed with London’s FTSE 100 index down 0.24%, Frankfurt’s DAX slipped 0.54% while the Paris CAC 40 slipped 0.01%.