The S&P/TSX composite index was down 14.90 points to 12,370.80, in a shortened trading session that ended at 1 p.m. ET. The TSX Venture Exchange rose 7.89 points to 1,185.60.
The Canadian dollar was at 100.88 cents U.S., up 0.22 of a cent.
Attention continues to be focused on a deadline for U.S. politicians to avoid a combination of automatic tax increases and spending cuts that will go into effect in the New Year. There's a fear that the U.S. economy could be pushed into a recession of it goes over the so-called "fiscal cliff."
The Republican-dominated House has been at odds with the Democrat controlled White House and Senate over the best way to deal with the deficit. The two sides have been unable to find a workable compromise.
On Wall Street, where markets also closed early, investors appeared to be staying cautious as the budget deadline nears.
"People are just waiting to see what happens," said Colin Cieszynski, market analyst at CMC Markets Canada.
"Nobody really wants to go out and rock the boat at this point."
The Dow Jones industrials dropping 51.76 points to 13,139.08, the Nasdaq fell 8.41 points to 3,012.60 and the S&P 500 index was off 3.49 points at 1,426.66.
North American markets will be closed for the Christmas Day holiday, and the TSX will also be closed on Wednesday for Boxing Day.
In commodities, March copper was down 2.1 cents at US$3.55 a pound while February gold bullion ended 60 cents lower to US$1,659.50 an ounce.
The January crude oil contract on the New York Mercantile Exchange slid five cents to US$88.61 a barrel.
Chevron Canada Ltd. is moving to acquire a 50 per cent stake in a proposed liquefied natural gas export terminal near Kitimat, B.C., in a series of deals that will result in the exit of two of the three current partners.
Under the deal, the subsidiary of Chevron Corp. (NYSE:CVX) has agreed to buy out the stakes held by Encana Corp. (TSX:ECA) and a subsidiary of EOG Resources, Inc. (NYSE:EOG), which each hold 30 per cent. Apache Corp. (NYSE:APA), which holds the remaining 40 per cent, will raise its stake to 50 per cent.
Encana shares were down 47 cents at $19.66 in Toronto. In New York, Chevron slid 98 cents to US$108.63, EOG slipped 80 cents to US$122.77 and Apache dropped $1.32 to $78.68.
Key U.S. lawmakers are already predicting that much of their holiday season will be spent in Washington. Many believe that the most that will be achieved is a stop-gap measure to avoid the federal spending cuts and broad tax hikes that would take effect Jan. 1 if no budget deal is reached.
President Barack Obama said Friday that he is "ready and willing" to get a big package done to deal with the fiscal cliff, adding there's no reason not to protect middle-class Americans from tax increases.
Obama said spoke Friday with House Speaker John Boehner and met with Senate Majority Leader Harry Reid. He says Congress should pass a plan to extend tax breaks for the middle class and extend unemployment benefits.
Sen. Joe Lieberman said Sunday that it "It's the first time that I feel it's more likely we'll go over the cliff than not," following the collapse late Thursday of House Speaker John Boehner's plan to allow tax rates to rise on million-dollar-plus incomes. Wyoming Sen. Jon Barrasso, a member of the Republican leadership, predicted the new year would come without an agreement.
This week investors will be squaring away their tax books for the year. Monday marks the last day for tax-loss selling for Canadian taxpayers selling equities through domestic accounts. The deadline for U.S. securities tax loss sales is Wednesday.
Sears Canada Inc. (TSX:SCC) said its chief financial officer Sharon Driscoll, who has been CFO for the national retailer since December 2010, will leave the company on Jan. 4 to pursue other interests. Its shares were up 17 cents to $10.83.
Shares of BlackBerry-maker Research In Motion (TSX:RIM) continued to lose ground, falling another three per cent, after a steep 22 per cent decline on Friday.
Investors have responded negatively to RIM's early details of a new plan that could see its lucrative one-plan-fits-all service fees turned into an a la carte menu, which some believe could negatively affect revenues. RIM's shares ended Monday down 36 cents at $10.50.
Most markets across Europe were only open for half a day and will only re-open again on Thursday. German markets, and others, were closed for Christmas Eve.
Among those that were open, Britain's FTSE 100 index of leading British shares closed up 0.2 per cent at 5,954.18 while the CAC-40 in France was down an equivalent rate at 3,652.61.
Earlier in Asia, Hong Kong's Hang Seng, closed up 0.1 per cent at 22,531.51 while South Korea's Kospi rose less than 0.1 per cent to 1,981.82. Japanese markets were closed for the Emperor's birthday holiday.Suggest a correction