Toronto stocks closed lower Wednesday, with gold the only source of comfort for investors amid ongoing worries over a possible war with Iraq. The S&P/TSX composite index slipped 32.87 points to 6,559.68.

The United Kingdom plans to introduce a new draft resolution on Iraq within days that will contain a deadline for Iraq to show that it is actively co-operating, its ambassador to the United Nations said Wednesday.

The exact language of the resolution hasn’t been agreed upon, but diplomats said it would authorize force if Iraqi leader Saddam Hussein fails to meet the deadline.

The TSX gold index climbed 1.56%, as investors renewed their flight to safety. Placer Dome Inc. rose 47¢ to $16.39, while Glamis Gold added 49¢ to $17.72.

The heavily weighted financial services sector fell 0.84%, pulling back after three days of strong gains.

Leading the pullback was TD, down 63¢ at $33.85, and Manulife Financial, which fell 47¢ to $36.99.

Ballard Power Systems rose 57¢to $15.97 after it narrowed its loss in the fourth quarter with sharply higher revenue and reduced costs.

Heroux-Devtek reported a $6.8 million loss in its latest quarter in the wake of slumping aerospace sales. Its shares dropped 29¢ to $4.45.

Toronto volume was 158.9 million shares worth $2.06 billion. Advances narrowly beat declines 554 to 523, with 201 unchanged.

Benefiting from the renewed interest in gold, the TSX Venture Exchange was up 6.37 points at 1,094.7.

In New York, the Dow Jones industrial average closed 40.55 points lower to 8,000.6, after two consecutive sessions of triple-digit advances.

The tech-heavy Nasdaq composite index fell 12.21 points to 1,334.33, while the S&P 500 index gave up 6.04 points to 845.13.

The Canadian dollar rose 0.18¢ to close at US66.10¢.

Tomorrow investors will get a look at merchandise trade numbers for Canada and the U.S., Canadian retail sales for December and the U.S. leading indicator.