Photo: The Canadian Press. All rights reserved.

The Toronto Stock Exchange (TSX)'s name is shown on the facade of its former home on Bay Street in Toronto. THE CANADIAN PRESS/Chris Young

The Toronto stock market was lower Wednesday as prices for oil and metals slid amid concerns about potential fallout from the worsening debt crisis in Europe and Greek elections on Sunday.

The S&P/TSX composite index lost 32.84 points to 11,464.46 with attention focused on Spain and Italy and the higher borrowing costs both countries are facing while the TSX Venture Exchange lost 6.8 points to 1,262.9.

The Canadian dollar was down 0.1 of a cent to 97.3 cents US.

U.S. markets were lower as data for May showed retail sales dropped by 0.2 per cent. But most of the weakness was focused in a drop in gasoline prices.

The Dow Jones industrials were down 35.95 points to 12,537.85, the Nasdaq composite index dropped 4.63 points to 2,838.44 and the S&P 500 index lost 4.81 points to 1,319.37.

The Toronto and New York markets registered solid gains Tuesday on hopes the U.S. Federal Reserve was about to step up with a new round of stimulus measures. Comments by Charles Evans, president of the Fed's Chicago bank, said he supported action to produce faster job growth.

His remarks helped mask concerns about the effectiveness of a Spanish bank rescue announced over the weekend and a downgrade of Spain's banks by ratings agency Fitch.

Traders worry that the $E100 billion euros being made available to Spain to aid its banks will just add to the government's already considerable debts and perhaps force it to seek its own sovereign bailout.

The lack of confidence has been expressed in bond markets where Spain has been forced to pay higher yields to attract buyers for its debt. The yield on Spain's benchmark 10-year bond had hit a euro-era high of 6.72 per cent but dropped slightly Wednesday.

Spanish contagion has spread to other heavily-indebted countries. Italy paid 3.972 per cent interest rates, up from 2.34 per cent last month, to sell $E6.5 billion in 12-month paper. The bond auction enjoyed strong demand. The sale was a warm-up for Thursday's weightier longer-term paper auction.

The debt crisis is not just rattling financial markets, but also affecting households and businesses by creating uncertainty over the future of the economy. The latest report from Eurostat, the EU statistics agency, showed industrial production in April among the 17 countries that use the euro slipped 0.8 per cent. Analysts noted that even that poor showing is worse than it seems because a cold spring pushed up energy demand.