TORONTO - The Toronto stock market closed sharply lower Tuesday amid rising investor disappointment with a mixed bag of earnings reports and impatience over the lack of an agreement among American lawmakers on raising the country's debt limit.

The S&P/TSX composite index fell 135.39 points to 13,300.56, while the TSX Venture Exchange slipped 13.11 points to 2,023.52.

The market finished the day close to the lows of the session after the White House threatened late in the afternoon to veto Republican-sponsored emergency legislation to raise the debt limit.

Nervousness over a looming Aug. 2 deadline to raise the limit or risk a default punished the American dollar, helping to send the Canadian currency up 0.34 of a cent to 106.07 cents US. The loonie earlier ran as high as 106.3 cents US, its highest level since early November 2007.

The ongoing debt impasse has led to fears the world's largest economy could default on its financial obligations and send shockwaves throughout world markets.

But analysts pointed out that the debt showdown has had other unwelcome effects.

"I think the biggest impact is actually in sentiment on the business confidence, and on consumer confidence and the confidence that they have in political leadership in the U.S.," said Norman Raschkowan, North American strategist at Mackenzie Financial Corp.

"And that will weigh on spending decisions and investment decisions and that's I think where the economic impact will come from. I don't think it's the 'default' issue, I think it's this."

The telecom sector was down almost two per cent as Rogers Communications Inc. (TSX:RCI.B) said second-quarter profits slipped nine per cent to $410 million or 75 cents a share, reflecting "continued impact" of increased competition in the mobile phone industry. Its shares lost $1.32 to $36.50.

The financials sector was also a major drag, down 1.34 per cent with Royal Bank down 76 cents to $52.06 while TD Bank (TSX:TD) fell $1.48 to $78.68.

The energy sector was off 0.94 per cent as the weak greenback boosted oil prices, with the September contract on the New York Mercantile Exchange up 39 cents at US$99.59 a barrel. Canadian Natural Resources (TSX:CNQ) lost 77 cents to C$40.62.

Oilsands operator Cenovus Energy Inc. (TSX:CVE) reported that its quarterly net profits soared to $655 million or 85 cents a share from $183 million or 24 cents a year earlier. Cash flow jumped to $939 million from $537 million. Its shares were down 77 cents to $37.15.

The base metals sector was down 1.19 per cent as copper prices headed higher with the September contract ahead seven cents to US$4.48 a pound. Inmet Mining fell $3.40 to C$66.60 after the miner reported second-quarter profits of $56 million on Monday, up from $51 million a year ago. But net income attributable to Inmet shareholders dropped 18 per cent from $56 million, or 86 cents per share, from $68.5 million, or $1.22 per share in the second quarter of 2010.

First Uranium Corporation (TSX:FIU) shares tumbled nine cents or 15.25 per cent to 50 cents after it said the South African National Nuclear Regulator has ordered the company to stop disposing waste at its tailings operations in the country. The Toronto company operates gold and uranium mines in South Africa.

The industrials sector was down 1.82 per cent with shares in Canadian National Railway Co. (TSX:CNR) down $3.19 to $72.05 after it reported quarterly earnings of $538 million or $1.18 a diluted share, up from $534 million or $1.13 a year earlier. Revenues rose eight per cent to $2.26 billion. CN also said it expects its fall shipping peak to be delayed this year due to a late crop harvest and lower consumer confidence, which has its shipping services clients seeking to avoid big inventories.

The gold sector was also lower as nervous investors seeking safe havens sent bullion up $4.60 to a new record close of US$1,616.80 an ounce. Goldcorp Inc. (TSX:G) faded 63 cents to C$49.96.

The tech sector rose almost one per cent. Research In Motion (TSX:RIM) shares were up 67 cents to C$25.86 a day after announcing it was laying off 2,000 of its workers.

Information technology company CGI Group Inc. (TSX:GIB.A) said its third-quarter net earnings rose 37.9 per cent to $118.4 million. Revenue increased 15.1 per cent to $1.04 billion. CGI also said that uncertainty about the U.S. federal budget is delaying potential new government contracts in this key area of its business and its shares rose 14 cents to $21.50.

New York markets were lower amid a positive reading on U.S. consumer confidence with the Dow industrials down 91.5 points to 12,501.3.

The Nasdaq composite index lost 2.84 points to 2,839.96 while the S&P 500 index slipped 5.49 points to 1,331.94.

The U.S. Conference Board reported that its July confidence index rose to 59.5 from 57.6.

However, other data showed slipping confidence in Canada. The Conference Board of Canada said that its Index of Consumer Confidence dropped for a third straight month in July, this time falling 1.8 points to 81.3.

"Consumers continue to express uncertainty about future job prospects, despite strong job creation numbers so far this year," it said in a release.

In other earnings news, Ford Motor Co. said its second-quarter profit dropped eight per cent from a year ago to US$2.4 billion or 59 cents a share as higher sales were offset by the cost of developing new products and expanding sales in Asia. Its shares surrendered early gains and declined 24 cents at US$12.93.