The Toronto Stock Exchange closed higher again Wednesday, thanks partly to gold prices that continue to rise on concerns over the European debt crisis.

After dropping earlier in the day, the TSX composite index rose by 88.61 points to 12,197.87. That follows a 438-point jump on Tuesday.

Gold continued its record rise, trading up $41.30 to US$1,784.30, as nervous investors put their money in what is widely considered a safe haven.

Meanwhile the Loonie fell 1.64 to 100.52 cents US over expectations that the Bank of Canada will follow in the footsteps of the U.S. Federal Reserve and keep interest rates low.

The picture was much different south of the border, where the Dow industrials fell 519.83 points to 10.719.94. The Nasdaq composite index plunged 101.47 points to 2,381.05 and the S&P 500 index dropped 51.77 points to 1,120.76.

On Tuesday the Fed announced it would keep interest at super low rates for the next two years, as a means of calming market jitters.

However, by Wednesday the deal hunters had cleared out and the bump from the Fed's announcement appeared to be over. Meanwhile, negative factors such as the European debt crisis and the widespread belief the U.S. is headed back into recession, remained.

Don Drummond, chief economist with TD Bank, said that Standard & Poor's downgrading the U.S. debt rating on Friday "is not that important," despite the market volatility that has ensued.

"Let's face it, the United States is running a terrible fiscal policy and it has for a long time," he told CTV News Channel Wednesday evening.

"It's a bit damed if you do, damned if you don't," he added. "If they ignore the fiscal side there will be more of this kind of turmoil, loss of confidence. But if they start chipping away aggressively at the deficit they will weaken their growth prospects."

Concerns in Europe

European markets opened Wednesday with a bump in early trading, but then turned negative as London's FTSE 100 index lost 0.93 per cent, the DAX in Frankfurt fell 1.48 per cent and the CAC 40 in Paris lost 3.76 per cent.

"I see a rally that really petered out very quickly in Europe and lacked conviction," Cooper said.

There were also concerns Wednesday that France could follow in the footsteps of the U.S. and lose its AAA credit rating on government debt. There have been warnings from some analysts that France can't afford to continue to bail out other struggling European nations.

The fifth-largest economy in the world, France has recently experienced moderating growth rates and there have been rumours the Societe Generale bank is in trouble.

Asian growth

Asian markets saw positive growth on Wednesday, reacting to the Fed's announcement.

Tokyo's Nikkei index rose 94.26 points, or just over 1 per cent, to close at 9038.74 on Wednesday.

Hong Kong's Hang Seng index also saw movement to the positive, jumping 452.97 points or 2.34 per cent before closing at 19,783.67.

The Shanghai Composite Index rose 0.9 per cent.

Markets in Australia, Taiwan, the Philippines and China all recorded growth on Wednesday.