The S&P/TSX composite index was down 82.46 points at 11,781.04, pulling back from hefty gains made in the past several sessions. On Tuesday, the TSX closed at its highest level since July 4.
The TSX Venture Exchange slipped 4.88 points to 1,185.68, while the Canadian dollar rose to 100.54 cents US, up 0.29 of a cent.
Traders have taken a more optimistic turn, motivated in part by comments from the U.S. and European central banks, but sentiment seems to be shifting back towards caution over whether economic improvement will be as good as first thought.
Several big consumer goods companies warned that weak demand in Europe was cutting into their revenue. That followed worrisome economic news from England, France and Germany, where growth had offset recessions in other European countries like Italy and Greece.
"It's quite opposite to what we had seen at the beginning of the year where we had seen strong employment numbers and strong growth," said Sadiq Adatia, chief investment officer at Sun Life Global Investment.
But he added, "I think investors as a whole are kind of rooting for the economy ... that's why when good news comes up they jump on it and start to push the markets higher a little bit, and then when it leads to the negative news they jump back down again."
On the TSX, information technology stocks were up 0.6 per cent, with Research In Motion (TSX:RIM) shares rising 24 cents, to $7.56 after an analyst report suggested it should partner with or be bought out by Samsung.
Telecom stocks gained 0.04 per cent after BCE Inc. (TSX:BCE) announced an increase to both its dividend and 2012 earnings forecast.
The telecom and media company says the dividend will rise to $2.27 per share annually, or 56.75 cents per share quarterly, beginning with the October payout. Expected adjusted earnings have been increased by two cents per share, to a range of between $3.15 and $3.20 per share.
The Montreal-based company said its profit rose to $773 million, or $1 per share, compared with $590 million, or 76 cents a share, a year ago. BCE shares were up $1.05 to $44.30.
On Wall Street, the Dow Jones industrial average increased 7.04 points to 13,175.64, closing out a session characterized by a slow climb out of negative territory. The Nasdaq fell 4.61 points to 3,011.25 and the S&P ticked up 0.87 of a point to 1,402.22.
Meanwhile, investors were waiting for China to release inflation, factory output and retail sales data on Thursday. Analysts expect inflation to fall further, which would give authorities in Beijing room to shore up slowing growth by easing credit without fear of igniting a spike in consumer prices.
In commodities, the September crude contract turned lower in the last minutes of trading on the New York Mercantile Exchange, falling 32 cents to US$93.35 a barrel. TSX energy stocks were the biggest decliner, down 1.2 per cent.
September copper moved down 1.9 cents to US$3.42 a pound, while December gold rose $3.20 to end trading at US$1,616 an ounce.
In Canadian earnings, Air Canada Inc. (TSX:AC.B) reported a $96-million net loss in the most recent three-month period, more than double the $46 million it lost a year earlier and more than analysts had expected. Revenue was flat, rising a slight $71 million to $2.99 billion. Shares were down nine cents to $1.06.
Takeover target Rona Inc. (TSX:RON) says its profit fell to $34.1 million in the second quarter, a penny below estimates and down from $37 million a year earlier. Revenue at Canada's biggest home-improvement chain was in line with estimates, rising by 3.4 per cent from a year ago to $1.4 billion. Shares of the company slid two cents to $13.73.
High Liner Foods Inc. (TSX:HLF) shares dipped 35 cents to $19.80 after it reported second-quarter profit sank due to costs from its purchase of Icelandic USA. Net income dropped to $995,000 from $4.8 million a year earlier, though on an adjusted basis it was flat at $5.5 million. Sales rose 42.9 per cent to $219 million.
In Europe, markets shifted only slightly. Germany's DAX lost 0.01 per cent to 6,932 while France's CAC-40 was 0.4 per cent lower at 3,438. Britain's FTSE 100 increased 0.08 per cent to 5,846 after the Bank of England cut its growth and inflation forecasts. That has confirmed many economists' expectations that the Bank of England will provide more monetary stimulus later this year.
Many of Europe's indexes have hit multi-month highs on hopes the European Central Bank will soon unveil a new anti-crisis strategy. Those hopes have helped ease the bond market pressure on Italy and Spain. The latter has seen its benchmark 10-year bond yield settle below the seven per cent threshold considered unsustainable in the long run.