01/09/2012 09:41 EST | Updated 03/10/2012 05:12 EST

Loonie slightly higher after falling to three-week low earlier in session

TORONTO - The loonie rebounded to finish with a gain against the U.S. dollar on Monday after earlier dropping to a three week low as pessimism about the global economy weighed heavily on investor sentiment.

The Canadian dollar closed up 0.39 of a cent at 97.76 cents US after dropping to 96.90 cents earlier in the session, its lowest since Dec. 20.

A report from the Bank of Canada said businesses pessimism is on the rise, with confidence notably lower than the highs reached after Canada emerged from recession in mid-2009.

Statistics Canada says the value of building permits issued in November fell 3.6 per cent to $6.1 billion after a strong October as a drop in non-residential permits in November, especially in Ontario, more than offset gains in the value of residential permits.

Commodity prices weakened with the February crude oil contract on the New York Mercantile Exchange down 25 cents at US$101.31 a barrel. The February gold bullion contract fell $8.70 to US$1,608.10 an ounce, while copper lost two cents to US$3.42 a pound.

International markets were widely lower as traders remain focused on Europe's stumbling efforts to get a handle on its government debt crisis.

French President Nicolas Sarkozy and German Chancellor Angela Merkel met Monday, a month after all 27 EU countries except Britain agreed to thrash out a new treaty by March to enforce tougher budget controls.

European leaders were meeting to flesh out a fiscal treaty they agreed to pursue late last year. The plan would impose stricter budget oversight on countries that use the euro.