The S&P/TSX composite index gained eight points to 12,197 as traders weighed economic news ahead of the launch of U.S. earnings season with a report from Alcoa after markets closed.
The Canadian dollar was up 0.39 of a cent to 97.76 cents US after dropping to 96.90 cents earlier in the session, the weakest it has been since Dec. 20.
On Wall Street, the Dow Jones industrials closed 33 points higher at 12,393. The Nasdaq composite index added two points to 2,677 and the S&P 500 index rose three points to 1,281.
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.
A new report from the Bank of Canada said that business pessimism is on the rise, with confidence notably lower than the highs reached after Canada emerged from recession in mid-2009.
Investors were also looking to the unofficial launch of U.S. earnings season with Alcoa Inc.'s fourth-quarter results. The aluminum company, which reported results after the close, is considered an economic bellwether because so many industries use its products.
The New York manufacturing giant said Monday that its net loss was $191 million, or 18 cents a share, in the October-to-December quarter. That compared with net income of $258 million, or 24 cents a share, a year ago.
The most recent quarter included $185 million in one-time charges. Excluding those, the company's net loss was $34 million, or three cents a share. Analysts surveyed by FactSet estimated a loss of two cents per share on revenue of $5.72 billion.
Revenue rose to $6 billion from $5.65 billion.
Earlier Monday, Alcoa announced it plans to shut three European aluminum smelters as part of its plan to cut global smelting capacity by 12 per cent or 531,000 tonnes.
"Overall, investors are really in a wait-and-see mode," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.
"While the TSX and the U.S. markets opened the year stronger, investors continue to be worried about what's going on in Europe and whether we'll see good news from European leaders hoping to resolve the debt crisis."
Statistics Canada said 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, especially in Ontario, more than offset gains in the value of residential permits.
In corporate news, Canada's largest publicly traded miner, Teck Resources Ltd. (TSX:TCK.A), moved to solidify its position in the oil business, offering more than $435 million for its oilsands partner SilverBirch Energy Corp. (TSXV:SBE). The transaction is valued at $8.50 cash for each SilverBirch share plus one share of a new spin-off company, to be called SilverWillow Energy Corp..
SilverBirch shares gained 33 per cent or $2.41 to $9.61. Teck shares dropped $1.06 to $38.89.
Canadian Pacific Railway Ltd. (TSX:CP) is standing by its chief executive officer, saying its board of directors has unanimously decided it's "not in the best interests" of CP or its shareholders to replace Fred Green.
The CEO has been targeted for removal by a American financier who controls nearly 15 per cent of the company's outstanding stock. He wants the former CEO of Canadian National to take the leadership role. Shares in the company lost 21 cents to $69.29.
And Goldcorp Inc. (TSX:G) stock was up 1.33 per cent or 60 cents to $45.80 after it said it expects to produce 2.6 million ounces of gold in 2012, about four per cent more than last year as it starts seeing output from its Pueblo Viejo joint venture in the Dominican Republic.
Timminco Ltd. (TSX:TIM) says its shares will be delisted from the Toronto Stock Exchange on Feb. 6, about a month after the TSX suspended trading of the insolvent metal producer's stock. It last traded at 15 cents per share.
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.