Photo: The Canadian Press. All rights reserved.

People take cover with their umbrellas in Toronto's financial district, Oct. 29, 2012. THE CANADIAN PRESS/Nathan Denette

The Toronto stock market was higher after two days of losses amid worries about the knock-on effects from the U.S. economy going over the so-called fiscal cliff.

The S&P/TSX composite index climbed 25.87 points to 12,216.92 while the TSX Venture Exchange added 3.6 points to 1,302.28.

The fiscal cliff label refers to a string of tax increases and steep spending cuts to the tune of US$600 billion set to go into effect Jan. 1 unless Democrats and Republicans can come together and arrange a deficit-cutting compromise. Failure to do so would likely tip the U.S. back into recession and drag down other economies with it.

Bank of Canada governor Mark Carney says the fiscal cliff is the most imminent threat facing the Canadian economy.

Traders found little comfort from an early afternoon announcement by President Barack Obama that he is inviting congressional and business leaders to a meeting next week for talks aimed at finding a compromise.

But he made it clear that spending cuts must be combined with new revenue, adding he would not accept any approach that isn't balanced and includes the wealthy paying more taxes.