The S&P/TSX composite index declined 8.09 points to 15,172.24.
The sticking point in talks between the two sides this week had been that the proposal from Greece's new government did not promise to continue all of the budget cuts and reforms that the eurozone has demanded as a condition for past bailout payments.
In return for the extension, Greece committed not to pursue any "unilateral" measures that might affect the country's budget targets. Greece also committed to provide a list of reforms based on its current bailout program for assessment on Monday.
Greece's current bailout program is due to expire Feb. 28. In the short term, if no solution is found, Greece could be left to handle its debts alone starting next month.
"Although more negotiations will be coming, the fact that a deal was struck is encouraging and it shows that concessions can be made by both sides," observed Jennifer Lee, BMO Capital Markets senior economist.
"This deal also allows time to be bridged between all parties to allow a possible followup arrangement, along with the International Monetary Fund."
The Canadian dollar moved down 0.3 of a U.S. cent to 79.71 cents as Statistics Canada reported retail sales slid 2.1 per cent in December to $42.1 billion, the largest decline since April 2010.
New York markets took off on optimism about a successful outcome to the Greek debt talks as the Dow Jones industrials jumped 154.67 points to 18,140.44, the Nasdaq gained 31.27 points to 4,955.97 and the S&P 500 index was up 12.85 points at 2,110.3.
In Toronto, the financial sector led decliners, down 0.7 per cent as Fairfax Financial Holdings (TSX:FFH) fell $30.90 or 4.5 per cent to $659.10 after announcing an agreement to issue 1,000,000 subordinate voting shares for $650 each.
Bank stocks also moved lower ahead of the release of earnings next week from most of the big institutions. Royal Bank was down $1.22 to $76.01.
The energy sector declined 0.66 per cent as oil prices added to losses racked up Thursday in the wake of the latest data showing sharp rises in American inventory levels. The April contract in New York fell $1.02 to US$50.81 a barrel.
March copper was off three cents at US$2.59 a pound and the base metals sector was down 0.5 per cent.
The gold sector rose about 0.5 per cent even as April gold faded $2.70 to US$1,204.90 an ounce.
In other corporate developments, transport giant Bombardier (TSX:BBD.B) lost further ground after announcing it now expects to raise $938 million from its equity offering — up from the previous estimate of $750 million.
Under the deal, Bombardier will issue nearly 424.2 million subscription receipts to be exchanged for Class B shares at a price of C$2.21 each. The move comes amid soaring costs for developing its new CSeries airliner. Its shares slipped another five cents to $2.40.
The TSX snapped a four week run of advances, losing 93 points or 0.6 per cent, led by losses in financials and energy stocks.