TORONTO - The Toronto stock market saw a triple-digit loss Thursday as a higher U.S. dollar put downward pressure on commodity prices and pushed gold to its lowest close in more than a month.

The S&P/TSX composite index lost 163.98 points or 1.4 per cent to 11,473.06 as the greenback strengthened to a three-month high against the euro.

The higher U.S. dollar is a result of concerns over the economies of some European countries causing flight to the relative safe haven of the greenback, said Gareth Watson, director of the Canadian equities portfolio advisory group at Scotia McLeod.

On Wednesday, Standard&Poor's followed its rival Fitch and downgraded its credit rating on Greece due to the country's staggering US$440-billion public debt.

There are also concerns about debt levels in other European countries, including Ireland, Portugal and Spain. News last month that Dubai World, a government-owned investment company, was looking to postpone debt payments on around US$59 billion sent shock waves through the financial world, Watson said.

"Even though you look at the United States and you think, 'Ugh, what a mess,' people still put their faith in the U.S. dollar because if there's one country people feel will pay them back at the end of the day, it's the United States government," he said.

"So when things start to become a little more risky, then you start to see people go to the U.S. dollar."

However, Watson described Thursday's climb in the dollar as a "short-term reaction."

"The longer-term trend is still likely a weaker U.S. dollar in 2010, simply because they still don't have their act together. The balance sheet of the United States is still not great."

Strength in the U.S. dollar caused the loonie to finish 0.87 of a cent lower at 93.43 cents US Thursday after being down as much as 1.26 cents earlier in the day.

Commodities were also lower. TSX gold stocks took a drubbing, with the gold index down 4.8 per cent as the February bullion contract lost $28.80 to US$1,107.40 on the New York Mercantile Exchange, its lowest close since Nov. 12.

Shares in Goldcorp Inc. (TSX:G) lost $2 or 4.8 per cent to $40 while Barrick Gold Corp. (TSX:ABX) fell $1.24 or 2.9 per cent to $41.05.

The January crude oil contract on the Nymex pared earlier losses, closing down one cent to US$72.65 a barrel. The TSX energy sector was down 1.3 per cent. Suncor Energy Inc. (TSX:SU) shares lost $1.35 or 3.6 per cent to $36.55 after the company said it expects production at an oilsands upgrader in northern Alberta to be reduced for a few weeks as the company repairs damage caused by a fire.

The base metals sector also lost ground, falling 1.8 per cent as metals prices slipped in response to the higher U.S. dollar. HudBay Minerals Inc. (TSX:HBM) lost 44 cents or three per cent to $14.06.

Also sending stock markets lower was the knowledge that this is the last full trading week of 2009 and investors may take the opportunity to bolster their portfolios by locking in gains made over the last nine months.

In New York, the Dow Jones industrials lost 132.86 points to 10,308.26. The Nasdaq composite index was down 26.86 points to 2,180.05, while the S&P 500 index fell 13.11 points to 1,096.07.

The TSX Venture Exchange fell 18.64 points to 1,421.15.

In economic data, the number of newly laid-off workers filing claims for unemployment benefits in the United States rose unexpectedly last week to 480,000, up 7,000 from the previous week. That was a worse performance than the decline to 465,000 that economists had expected.

Meanwhile, the U.S. Conference Board said its index of leading economic indicators rose for the eighth straight month in November, signalling the economic rebound will continue into next year.

And Statistics Canada reported Thursday that Canadians are again starting to pay more for most things they consume as the inflation rate jumped to an annualized one per cent in November, the second straight month prices have risen sharply.

While higher gasoline prices were mostly to blame, Statistics Canada said the advance was broad-based.

In corporate news, shares in BCE Inc. (TSX:BCE) added 92 cents or 3.5 per cent to $27.30 after the telecommunications company said it will raise its annual dividend by seven per cent for 2010.

Shares in potash producers were also lower after Agrium Inc. (TSX:AGU) said it has made "significant progress" in its expansion of a potash mine in Saskatchewan that is expected to add 750,000 tonnes of capacity to the market. Agrium shares lost $2.22 or 3.4 per cent to $63.89, while shares in Potash Corp. of Saskatchewan (TSX:POT) fell $6.32 or five per cent to $119.20.