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The Toronto stock market was sharply lower Wednesday amid growing pessimism over the pace of budget negotiations aimed at heading off a fiscal crisis in the U.S.

The S&P/TSX composite index fell 103.2 points to 12,008.43 with weakness spread across all sectors while the TSX Venture Exchange dipped 1.49 points to 1,204.68.

The Canadian dollar was off 0.06 of a cent to 100.47 cents US.

U.S. indexes were also lower with the Dow Jones industrials down 67.49 points to 12,810.64.

The Nasdaq shed 21.29 points to 2,946.51 while the S&P 500 index dropped 9.24 points to 1,389.7 as North American markets extended the losses from Tuesday which were triggered by comments from Senate Majority Leader Harry Reid. He said that there has been "little progress" in talks about avoiding a so-called fiscal cliff at the end of next month.

Economists say the combination of steep tax increases and spending cuts would significantly cut economic growth and likely push the U.S. back into recession and damage other economies around the world.

President Barack Obama is meeting with corporate executives at the White House on Wednesday and then travelling to Pennsylvania on Friday to push for upper income bracket earners to pay higher tax rates.

But he is not meeting with Congressional leaders until next week.

"More members from both sides need to start walking toward the middle in the next four weeks and, at least, agree on a two-step process to avoid the cliff," said BMO Capital Markets senior economist Sal Guatieri.

"This involves a down-payment on some deficit reduction by year end, while leaving the details on broader deficit fighting when the new Congress begins next year."

Commodity prices fell as the U.S. dollar strengthened.

The gold sector led losers, down 2.4 per cent as December gold on the New York Mercantile Exchange dropped $28.70 to US$1,713.60 an ounce. Goldcorp Inc. (TSX:G) faded $1.16 to $37.79.

The mining sector lost 1.65 per cent while December copper lost five cents to US$3.49. Teck Resources (TSX:TCK.B) shed 51 cents to $31.76.

January crude dropped $1.52 to US$85.66 a barrel and the energy sector dropped almost one per cent. Suncor Energy (TSX:SU) fell 44 cents to $32.45.