The S&P/TSX composite index was 6.65 points higher to 11,521.18 and the TSX Venture Exchange was down 3.6 points to 1,183.35.
The Canadian dollar was down 0.01 of a cent to 98.55 cents US a day before the Bank of Canada makes its next scheduled announcement on interest rates. Economists expect the bank will leave its key rate unchanged at one per cent. But analysts will be looking at the tone of the bank's accompanying statement for indications of when the bank might start to raise rates.
U.S. markets were negative as American retail sales data for June came in much worse than expected. Sales slid 0.5 per cent versus the 0.2 per cent gain that had been forecast. The decline followed a 0.2 per cent dip in May.
And the International Monetary Fund cut its growth forecast for China’s slowing economy Monday and said a “hard landing” was still possible.
The IMF reduced its Chinese growth outlook for 2012 by 0.2 percentage point to eight per cent and for 2013 by 0.3 points to 8.5 per cent. Data released Friday showed that China’s second-quarter growth fell to a three-year low of 7.6 per cent as exports, consumer spending and factory output weakened.
The IMF also said in a quarterly update that the world economy will likely expand 3.5 per cent this year, down slightly from its previous estimate of 3.6 per cent in April.
However, as on Friday, investors were encouraged by the possibility that such weak data would persuade officials in China and other countries to embark on further stimulus to push the economy ahead.
"If we get a meaningful amount of stimulus out of China and inflation remains relatively contained, that would be hugely beneficial for the Canadian market because the TSX has been under the heavy thumb of declining commodity prices for the last several months," said Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis.
"And if we could start to see a hint of acceleration out of the Chinese economy, that will go a long way towards pushing external commodity demand up and the TSX will benefit greatly."
The Dow Jones industrials dropped 49.88 points to 12,727.21, the Nasdaq composite index dipped 11.53 points to 2,896.94 while the S&P 500 index declined 3.14 points to 1,353.64 .
Traders also looked to a raft of U.S. corporate earnings statements that should shed more light on the state of the U.S. economic recovery.
Citigroup reported earnings that beat expectations. The bank said earnings excluding extraordinary items came in at US$1 a share, versus expectations of 89 cents. Revenues came in at US$18.4 billion, less than the $18.76 billion that analysts expected and its shares rose 16 cents to US$26.81.
Over the course of the week, around 90 companies listed on the S&P 500 are due to report earnings.
Commodity prices were mixed after sharp runups in oil and copper at the end of last week.
The energy sector was up 0.79 per cent as hopes for more central bank stimulus helped send the August crude contract on the New York Mercantile Exchange up $1.33 to US$88.43 a barrel. Cenovus Energy (TSX:CVE) climbed 21 cents to C$33.49.
The telecom sector was also supportive, up 0.39 per cent as Rogers Communications (TSX:RCI.B) rose 36 cents to $38.07.
The base metals group was the biggest decliner, down 1.88 per cent as copper prices slipped two cents to US$3.48 a pound. Ivanhoe Mines (TSX:IVN) shed 24 cents to C$8.25.
The gold sector was off about 0.45 per cent as bullion moved down 40 cents to US$1,591.60 an ounce. Goldcorp Inc. (TSX:G) was down 20 cents to $34.33.
Research In Motion Ltd. (TSX:RIM) helped depress the tech sector. Its shares lost 26 cents to $7.09 after a California jury ordered the troubled BlackBerry maker to pay $147.2 million to Delaware-based Mformation Technologies in a patent lawsuit. RIM said it is "disappointed"' and is "evaluating all legal options."
The consumer discretionary segment was also weak with Tim Hortons (TSX:THI) stock down $1.15 to $52.53 after Goldman Sachs downgraded the stock to sell. The move was based on concerns that more moderate recent same-store sales trends are underpinned by declining restaurant traffic. Analyst Michael Kelter told clients this may be an early sign of impending saturation of the Canadian market or a sustained increase in quick-service restaurant competition.
In other corporate news, two Canadian real estate trusts are teaming up with a 50-50 partnership that will redevelop or intensify some of their properties in downtown areas of major cities. RioCan Real Estate (TSX:REI.UN) and Allied Properties (TSX:AP.UN) say they will work together to satisfy the growing demand for mixed-use properties in Canadian cities. RioCan units were up 23 cents to $28.33 while Allied units gained 66 cents to $29.64.
Atco Group said Monday it is starting a new business that will provide pre-fabricated buildings to remote and aboriginal communities across Canada. The Calgary-based company (TSX:ACO.X) said the new subsidiary, Atco Sustainable Communities can design and build entire communities, including offices, schools, day care centres, housing, hockey arenas and retail outlets. Its shares added four cents to $73.93.