Traders also took in mixed U.S. earnings news, lower commodities and a major acquisition in the Russian energy sector.
The S&P/TSX composite index moved down 12.44 points to 12,403.54 after the federal government on Friday rejected a Malaysian state-owned energy giant's proposed takeover bid for Calgary-based natural gas producer Progress Energy Resources (TSX:PRQ). Progress shares lost $2.01 or 9.28 per cent to $19.64.
Petronas had offered $6 billion for Progress, but Industry Minister Christian Paradis said he was "not satisfied that the proposed investment is likely to be of net benefit to Canada." The thumbs down from Ottawa impacted share prices of other resource companies thought to be good candidates for a sale along with a hefty premium in the stock price. For example, Paramount Resources (TSX:POU) fell 27 cents to $33.73.
The move also was seen as putting at risk a deal by China's CNOOC Ltd. to acquire Nexen Inc. (TSX:NXY). Nexen shares dropped $1.11 to $24.04 .
"Everybody anticipated there might be a rejection for Nexen because it’s China and the state-owned oil company and the technology transfer and the rest of it," said Gavin Graham, president of Graham Investment Strategy.
"But Progress is absolutely straightforward, it's a state-owned oil company for a western-supporting democracy with no technology transfer so why on earth would there be any issues about net benefit? So it was a complete surprise."
The TSX Venture Exchange lost 7.19 points to 1,308.43.
The Canadian dollar was up 0.07 of a cent to 100.75 cents US, a day ahead of the Bank of Canada's next announcement on interest rates.
U.S. indexes were mainly flat amid an earnings report from heavy equipment manufacturer Caterpillar Inc. that beat earnings expectations but was also cautious about the future.
The Dow Jones industrial average added 2.38 points to 13,345.89, the Nasdaq composite index ran up 11.34 points to 3,016.96 while the S&P 500 index was up 0.62 of a point to 1,433.81.
Caterpillar’s third-quarter profit rose 49 per cent to US$1.7 billion, or $2.54 a share, higher than the $2.21 a share that analysts expected. Its stock shook off early losses to move up $1.22 to US$85.08 as the company said it now expects 2012 earnings of $9 to $9.25 a share, below its earlier estimate of about $9.60 a share. Revenue for 2012 is estimated at $66 billion, below its earlier range of $68 to $70 billion amid weaker than expected global economic conditions.
Shares at Vancouver-based Finning International (TSX:FTT), which sells, finances and services Caterpillar equipment, edged down 23 cents to C$23.85.
Elsewhere, Russian oil giant Rosneft is to buy TNK-BP, the joint venture between the AAR group of Russian oil oligarchs and BP, the British energy company. BP has agreed to sell its 50 per cent stake for $17.1 billion in cash and a 12.84 per cent stake in Roseneft.
The TSX energy sector was down 1.43 per cent as November crude declined $1.32 to US$88.73 a barrel. Losses extended to sector giants including Suncor Energy (TSX:SU), which shed 38 cents to $33.38.
The industrials sector was down 0.36 per cent with Canadian National Railways (TSX:CNR) down 61 cents to $87.07 ahead of the release of its earnings report later in the day. CN posted earnings of $664 million or $1.52 per diluted share on $2.5 billion of revenues. Analysts had expected the company’s adjusted earnings to come in at $1.51 per share, according to Thomson Reuters.
Tech companies moved lower ahead of earnings updates from Yahoo and Texas Instruments later Monday. CGI Group (TSX:GIB.A) dipped 14 cents to $25.07.
Research In Motion (TSX:RIM) says it has been chosen to provide security technology to EnStream, a mobile payment company set up by Canada’s three largest wireless networks. The BlackBerry maker also owns technology for secure payments between consumers and retailers on mobile devices. RIM shares slipped four cents to $7.65.
The market found support from the gold sector, which rose per cent as December bullion improved by $2.30 to US$1,726.30 an ounce. Barrick Gold Corp. (TSX:ABX) was ahead 50 to C$39.05.
And the mining sector advanced 0.7 per cent while December copper was down two cents at US$3.62 a pound after sliding 10 cents on Friday. HudBay Minerals (TSX:HBM) climbed 12 cents to C$9.51.
The financials was slightly higher with Royal Bank (TSX:RY) ahead eight cents to $58.60 after CNBC reported it is in talks to buy the Canadian business of the former financing arm of General Motors, Ally Financial Inc. The business channel cited a source saying that TD Bank (TSX:TD) and Royal have been bidding on the assets, but it was unclear whether TD would top Royal Bank's latest offer for Ally Canada. TD gained 14 cents to $82.92.
The quarterly earnings reporting season kicks into gear this week. Tech company Celestica (TSX:CLS) reports on Tuesday and gas producer EnCana (TSX:ECA) and telecom Rogers Communications (TSX:RCI.B) on Wednesday.
Thursday sees the heaviest day with earnings coming in from gold producers Agnico Eagle Mines (TSX:AEM) and Goldcorp Inc. (TSX:G), energy companies Cenovus Energy (TSX:CVE) and Nexen Inc. (TSX:NXY) and Shaw Communications (SJR.B).
In other corporate news, fertilizer company Agrium Inc. (TSX:AGU) says it will double the company’s dividend to US$2 per share annually and switch to a quarterly payment schedule. Agrium also says it will repurchase about 8.72 million of its shares for C$103 each under a previously announced buyback program. Its shares were $3.31 higher to $107.26.