There was also caution ahead of Greek elections on Sunday.
The S&P/TSX composite index edged 31.45 points lower to 11,466.42 with traders also focused on Spain and Italy as the two countries felt the pressure of higher borrowing costs.
"I don’t think anybody is feeling strongly bullish by any means," said Sadiq Adatia, chief investment officer at Sun Life Global Investment.
"People want to see what the situation looks like in Greece with the election and it’s a wait and see approach here."
The TSX Venture Exchange gained 8.46 points to 1,252.33.
The Canadian dollar was up 0.52 of a cent to 97.68 cents US.
U.S. markets were positive on hopes that the Federal Reserve could signal the possibility of another round of economic stimulus at its meeting next week and rumours that eurozone officials are preparing co-ordinated action to deal with the region's banking crisis.
The Dow Jones industrial average jumped 155.53 points at 12,651.91.
The Nasdaq composite index gained 17.72 points to 2,836.33 and the S&P 500 index climbed 14.22 points to 1,329.1.
Greeks will determine whether the country sticks to its highly unpopular austerity program of tax hikes and spending cuts that a previous government accepted in order to receive billions of euros in bailouts that are keeping the country afloat.
If political parties are elected that favour reneging on the program, the international bailout and Greece's membership in the euro currency union would be at risk.
Meanwhile, Athens’ main stock index closed a stunning 10.1 per cent higher, with banking shares up a collective 23.6 per cent.
The surge reflected investor hopes that the election will yield a government that can avoid a messy confrontation with Athens’ bailout creditors and keep the country in the eurozone.
Spain’s 10-year borrowing rate inched up to 6.96 per cent in intraday trading from 6.67 per cent. That is close to the seven per cent rate considered unsustainable. Greece, Portugal and Ireland were forced to seek financial rescue packages after rising to that level.
Ratings agency Moody’s downgraded Spain’s government debt three notches late Wednesday, placing it one level above junk status. Moody’s said the downgrade was due to the offer from eurozone leaders of up to €100 billion to Spain to prop up its failing banking sector, which the ratings agency believes will add considerably to the government’s debt burden.
The downgrade means that even fewer investors will buy Spanish debt as organizations such as pension funds are prevented from investing in assets with such a low score.
The debt crisis contagion continued to spread to Italy. Its 10-year borrowing rate rose to 6.07 per cent from 6.02 per cent, and the interest rate on its one-year bonds also rose sharply.
And in a bond auction, Italy paid a 5.3 per cent interest rate, up from 3.91 per cent last month, to sell €3 billion in three-year paper.
On the TSX, the tech sector led declines, down about 1.7 per cent with Research In Motion Ltd. (TSX:RIM) down 39 cents at $10.61 as a document filed with securities regulators shows that former co-CEOs Jim Balsillie and Mike Lazaridis will receive a combined $12 million in payouts for leaving their roles at the struggling company.
Elsewhere, Finnish cellphone maker Nokia Corp. (NYSE:NOK) said it will lay off 10,000 jobs globally and close plants by the end of 2013 in a further drive to save costs. Nokia is fighting fierce competition from Apple Inc.’s iPhone and other makers using Google Inc.’s popular Android software, including Samsung Electronics Co. and HTC of Taiwan. Nokia shares tumbled 43.5 cents or 15.59 per cent to US$2.355 in New York.
The TSX gold sector was down about 0.4 per cent as August gold edged up 20 cents to US$1,619.60 an ounce. Goldcorp Inc. (TSX:G) faded 66 cents to C$40.57.
The financials sector dipped 0.4 per cent, with Manulife Financial (TSX:MFC) shedding 20 cents to $10.57.
The base metals sector was the biggest advancer, up 0.8 per cent with July copper up two cents at US$3.35 a pound. First Quantum Minerals (TSX:FM) rose 45 cents to C$18.95.
The energy sector was flat as oil prices headed higher after OPEC oil ministers decided to keep a production target of 30 million barrels a day, citing mounting world economic concerns for their decision.
The July crude contract on the New York Mercantile Exchange was up $1.29 at US$83.91 a barrel. Canadian Natural Resources (TSX:CNQ) gained 16 cents to C$27.28.
In earnings news, shares in travel and vacation company Transat A.T. Inc. (TSX:TRZ.B) lost 36 cents to $4 after it posted a net loss of $13.2-million or 35 cents for its latest quarter. Overall revenue rose by $111 million to $1.2 billion due an acquisition in Transat’s North American arm, offset by lower selling prices and higher costs.
Hockey equipment company Bauer Performance Sports Ltd. (TSX:BAU) is buying Cascade Helmets Holdings Inc. for US$64 million in a bid to expand its lacrosse business and acquire the company’s patented helmet technology. Bauer shares were off two cents at $8.04.
Innergex Renewable Energy Inc. (TSX:INE) plans to acquire two hydroelectric generating facilities in British Columbia from Capital Power (TSX:CPX) for $69.2 million. Innergex shares dipped 13 cents to $10.21 and Capital Power ran up 28 cents to $23.96.