TORONTO -- North American markets sold off Wednesday as early relief over a clear-cut winner from the U.S. presidential election turned to pessimism over the prospects of stopping a string of tax hikes and steep spending cuts from taking effect at the end of the year.

Investors worry this so-called fiscal cliff scenario would send the U.S. back into recession, at the same time dragging down other economies around the world, including Canada's.

The S&P/TSX composite index fell 130.61 points to 12,230.59 with bigger losses held in check by a rising gold stocks.

Canadian investors also absorbed earnings reports from the resource and industrial sectors -- with several heavyweights missing estimates.

Losses in New York were far steeper as the Dow Jones industrials tumbled 312.95 points to 12,932.73, its worst day of 2012.

The Nasdaq composite index dropped 74.64 points to 2,937.29 and the S&P 500 index fell 33.86 points to 1,394.53.

"I think what we're seeing today is a reflection of, how often have we seen in the past four years -- at the 11th, point-59th hour -- did debt ceilings get raised and things of this sort or the can got kicked down the road?" said Pat McHugh, senior managing director and Canadian Equities Strategist at Manulife Asset Management.

"And that's what people are doing, saying, 'I can't stand this."'

The TSX Venture Exchange was 12.43 points lower at 1,290.71.

The Canadian dollar reversed most of Tuesday's 0.5 of a cent jump, falling 0.44 of a cent to 100.39 cents US as the U.S. dollar hit a two-month high, commodities backtracked and traders took in another reminder of the fragile state of Europe's economy as they looked ahead to a crucial vote in the Greek parliament later in the day.

There had been concern that the United States would have to endure a rerun of the protracted presidential election of 2000, but Barack Obama handily won a majority of electoral colleges votes.

However, the results still left Capitol Hill divided, with Democrats holding their majority in the Senate and the Republicans still in control of the House of Representatives. That could lead to a continuing logjam in policy-making, especially regarding the state of the country's public finances.

"And that may not be great news for the markets, especially as there are no concrete signs that either Republicans or Democrats are any more willing to reach across the isle and compromise on the key components to real sustainable fiscal reform," observed Andrew Pyle, investment adviser at ScotiaMcLeod in Peterborough, Ont.

The sell-off was also spurred by the European Union which downgraded its economic forecasts for the 27-country bloc. The EU's executive arm says it now expects the region's gross domestic product to contract by 0.3 per cent on an annual basis this year, rather than remaining flat as it predicted in the spring.

The commission's report also confirms that the crisis is not sparing even Germany, Europe's largest economy and the traditional motor for growth.

It predicted that Germany would eke out just 0.8 per cent growth in 2012, compared with its earlier forecast of 1.7 per cent.

Greece was also back in focus ahead of a crucial vote in its parliament later in the day that could determine whether the country stays in the eurozone. If lawmakers don't back a C13.50-billion package of spending cuts and tax increases, the country faces the prospect of losing access to its bailout lifeline and potentially defaulting on its mountain of debt and leaving the monetary union.

Commodity prices turned lower following sharp gains on Tuesday.

The energy sector led losers, down 2.25 per cent as the rising dollar and higher than expected U.S. inventories last week pushed the December crude contract on the New York Mercantile Exchange down $4.27 to US$84.44. Canadian Natural Resources (TSX:CNQ) lost $1.25 to C$28.95 while Suncor Energy (TSX:SU) fell 92 cents to $33.67.

The base metals sector fell almost two per cent as December copper shed seven cents to US$3.44 a pound. Turquoise Hill Resources (TSX:TRQ) declined 37 cents to C$8.49 while First Quantum Minerals (TSX:FM) dropped 48 cents to $22.91.

The higher U.S. dollar pressured commodities because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals which are dollar-denominated.

Research In Motion (TSX:RIM) shares fell 8.3 per cent to $8.23 after a report from an analyst at Pacific Crest Securities said that the BlackBerry 10 operating system will be "met with a lukewarm response at best and ultimately likely to fail."

The industrials sector was also a weight as transport giant Bombardier Inc.'s (TSX:BBD.B) net income rose to US$212 million or 12 cents a share in the third quarter. But its revenues slipped to US$4.3 billion, down about $300 million from the third quarter of 2011, lower than analysts had expected as weakness at its rail equipment division continued and its shares fell 16 cents or 4.43 per cent to $3.45.

Elsewhere in the component, WestJet (TSX:WJA) added 11 cents to $18.07 after reporting profits soared almost 80 per cent in the third quarter to $70.6 million or 52 cents per diluted share, up from $39.3 million or 28 cents per share a year ago.

The financials sector was a weight, down 1.17 per cent as Manulife Financial (TSX:MFC) gave back 52 cents to $12 while Royal Bank (TSX:RY) was down 81 cents to $56.33.

The gold sector was the only advancer, up about 1.5 per cent as December bullion dropped $1 to US$1,714 an ounce. Barrick Gold (TSX:ABX) climbed 87 cents to C$36.15.

Meanwhile, pipeline company Enbridge Inc. (TSX:ENB) posted net profit of $189 million or 24 cents per share, compared with a small net loss of $5 million or one cent a share last year. Adjusted earnings rose to $269 million or 34 cents per share, a penny below analyst estimates. Its shares slipped 70 cents to $39.39.

Agrium Inc. (TSX:AGU) reported it had $129 million or 80 cents per share in net income, down from $293 million or $1.85 per share a year earlier. Ex-items, the Calgary-based fertilizer company's net income would have been $215 million or $1.34 per share, well below a consensus analyst estimate of $1.76 per share and its shares gave back $11.37 or 10.69 per cent to $95.03.

Molson Coors Brewing Co. (TSX:TPX.B) (NYSE:TAP) beat expectations as net profit increased 1.5 per cent to US$197.7 million on US$1.2 billion of revenues. Its shares in New York were down $1.55 or 3.59 per cent to US$41.65.