TORONTO - The Toronto stock market closed sharply lower Tuesday as investors took profits following a sharp run of gains while gold moved further into record territory.

The S&P/TSX composite index closed down 135.85 points at 12,916.63 led by losses in financial, telecom and base metal stocks.

The key index has jumped about three per cent over the last six sessions to its highest level since early September 2008 -- just before the financial crisis worsened with the collapse of Lehman Bros.

The gains came amid relief that the U.S. Federal Reserve was embarking on a fresh round of stimulus as well as strong economic data, including better than expected U.S. job creation figures for October.

The TSX Venture Exchange was down 36.81 points at 2,005.03.

The U.S. dollar strengthened against a variety of currencies including the loonie early in the afternoon and the Canadian dollar closed down 0.36 of a cent at 99.27 cents US.

The greenback had been weaker earlier in the day, again sending the Canadian dollar above parity with the American currency and reaching as high as 100.2 cents US at one point.

The loonie has broken through parity several times since the end of last week but hasn't closed above that level since mid-April.

Markets turned volatile as tensions simmer over currencies and trade gaps ahead of the G20 meeting in South Korea on Thursday and Friday amid the Fed's move to flood a sluggish American economy with US$600 billion of cash.

Emerging economies in particular are worried that the Federal Reserve's move will further weaken the greenback and give an advantage to cheaper American exports.

"This is what (Fed chairman Ben Bernanke) wants, that asset prices including equities start to move up and the U.S. dollar moves down in a gradual pace," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

"That's the way they create jobs. (Bernanke) will never come out and say that but that's really what they're looking to do here."

At the same time, China has maintained tight control over its currency, the yuan, adding to criticism that Beijing is keeping it artificially low and giving Chinese exporters an unfair advantage.

Markets are also focused on Europe's ongoing debt problems and Ireland's ability to get its public finances in shape.

The growing worry in the markets is that Ireland's government may not be able to pass another bout of austerity measures on Dec. 7 and, as a result, it will have to seek financial assistance from its partners in the eurozone and the International Monetary Fund, as Greece had to earlier this year.

That conclusion appeared clear from what's going on in bond markets with the spread between Irish and German 10-year yields seemingly rising to record highs on a daily basis.

The base metals sector was down 2.56 per cent even as December copper contract rose nine cents to US$4.04 a pound. Teck Resources (TSX:TCK.B) lost $1.90 to C$48.44 while Equinox Minerals (TSX:EQN) dropped 60 cents to $5.79.

And the gold sector weakened despite bullion prices adding to Monday's record close. The December gold contract on the New York Mercantile Exchange was up $6.90 at US$1,410.60 an ounce as investors look to the precious metal as a safe haven.

"I think the way people are looking at gold is, rather than a commodity, it's viewed as a currency," Nakamoto said.

"And the appeal obviously is that you can't print more of it."

Some gold investors see the metal as a hedge against national currencies losing their value as a result of inflation. Gold was given another boost Monday when World Bank President Robert Zoellick wrote an op-ed piece in the Financial Times arguing that gold should have a place in the world's monetary system.

Goldcorp Inc. (TSX:G) dipped $1.24 to C$46.63 while Kinross Gold Corp. (TSX:K) faded 62 cents to $18.63.

The energy sector was off 0.42 per cent as the December crude contract on the Nymex slipped 34 cents to US$86.72. Suncor Energy (TSX:SU) was down 17 cents at C$35.96 while Cenovus Energy (TSX:CVE) rose 29 cents to $29.97.

The financial sector was the biggest TSX decliner, down about one per cent with TD Bank (TSX:TD) off 95 cents at $73.65 and Royal Bank (TSX:RY) down 85 cents at $54.40.

A well-received earnings report from information technology company CGI Group Inc. (TSX:GIB.A) helped push the tech sector up 1.8 per cent. CGI shares jumped $1.53 to $17.07. The company said fourth-quarter earnings grew 1.7 per cent to $84.1 million on the back of stronger revenues. Elsewhere in the group, Research In Motion Ltd. (TSX:RIM) lost $1.30 to $55.46.

New York markets were also lower with the Dow Jones industrial average 60.09 points lower at 11,346.75.

The Nasdaq composite index slid 17.07 points to 2,562.98 while the S&P 500 index was down 9.85 points at 1,213.4.

Elsewhere on the corporate front, the European Union has fined 11 airlines, Air Canada among them, a total of almost US$1.1 billion for fixing prices on international cargo shipments, leading to higher prices for businesses to move their goods.

Air Canada (TSX:AC.B), which took a $125-million provision related to the investigation in early 2008, said it was fined $29.4 million and its shares were down 24 cents at $3.43.

In other Canadian earnings news, technology licensing company Wi-LAN Inc. (TSX:WIN) reported a third-quarter loss of $6.2 million compared with a profit of $16.5 million in the comparable period a year earlier. Revenues increased 24 per cent to $11.3 million. Its shares fell 28 cents to $4.50.