The S&P/TSX composite index lost 25.28 points to 11,634.67 with losses led by resource stocks even as prices for oil and metals started to recover from steep drops at the end of last week.
"We seem to be stuck in this rut," said Allan Small, senior adviser at DWM Securities.
"I guess a positive for me is that the market is actually quite resilient. If you look at the halfway point, the TSX is pretty much flat for the year. But U.S. markets are fantastic."
The Canadian dollar moved 0.06 of a cent lower to 98.11 cents U.S., as oil gained ground and the Bank of Canada's new survey of business intentions suggested Canadian firms remain surprisingly optimistic about the next year, with positive expectations for sales, investment and hiring.
The most encouraging reading by the central bank was on hiring intentions, with 59 per cent of firms saying they plan to hire additional workers in the next 12 months, as opposed to only six per cent that plan to cut jobs.
The TSX Venture Exchange added 0.62 of a point to 1,211.98.
U.S. indexes remained firmly in the red after data Friday showed the U.S. economy only cranked out an average of 75,000 jobs a month during the second quarter, down sharply from 226,000 in the January-March period.
The International Monetary Fund also warned last week that it was downgrading its economic forecast.
The Dow Jones industrials fell 36.18 points to 12,736.29.
The Nasdaq composite index was down 5.56 points to 2,931.77 and the S&P 500 index lost 2.22 points to 1,352.46 .
The chronic eurozone debt crisis also chipped away at investor confidence as Spain's borrowing costs rose to dangerously high levels. The interest rate, or yield, on the country's 10-year bonds rose above seven per cent this morning, a level that market-watchers consider unsustainable. The crisis has centred on Spain in recent weeks as the country's banks struggle under the weight of toxic loans and assets following the collapse of the country's property market.
The TSX base metals sector fell 2.17 per cent as the September copper contract on the New York Mercantile Exchange edged up two cents to US$3.43 a pound following an eight-cent fall. First Quantum Minerals (TSX:FM) fell 52 cents to $18.11.
Teck Resources Ltd. (TSX:TCK.B) said Monday it has temporarily withdrawn its social and environmental impact assessment application for the Quebrada Blanca Phase 2 copper project in Chile. Teck declined 84 cents to C$31.08.
The energy sector was off 0.59 per cent as the August crude contract on the New York Mercantile Exchange was ahead $1.54 to US$85.99 a barrel after sliding $2.77 at the end of last week. Prices took off Monday as Norway prepared for a shutdown of its North Sea crude production.
Norway's oil industry, which produces more than 3.8 million barrels of oil and natural gas per day, said platforms were set to switch off due to a strike by offshore oil workers over retirement benefits.
Canadian Natural Resources (TSX:CNQ) dropped 26 cents to $26.32 and Suncor Energy (TSX:SU) dipped 20 cents to $29.16.
The gold sector was off about 0.3 per cent as bullion started to recover from Friday's $30 decline, up $10.20 to US$1,589.10 an ounce. Iamgold (TSX:IMG) was off eight cents to C$11.44 while Barrick Gold Corp. (TSX:ABX) faded 19 cents to US$37.36.
The industrials sector moved down 0.34 per cent with Canadian Pacific Railway (TSX:CP) down 58 cents to $74.45.
Transportation giant Bombardier Inc. (TSX:BBD.B) said Sunday that it received a conditional order valued at about $1 billion for 15 of the new C-Series aircraft the company aims to begin delivering by the end of next year. Its shares slipped a penny at $4.03.
In other corporate developments, Thomson Reuters Inc. (TSX:TRI) shares gave back four cents to $28.99 after the information provider made a friendly US$625-million offer to buy FX Alliance, a company that provides foreign exchange trading technology.
And in the U.S., health insurer WellPoint Inc. is buying managed care provider Amerigroup Corp. for about US$4.46 billion in cash. Amerigroup manages publicly-funded health programs like Medicaid.
There were a couple of bits of positive news Monday.
Aluminum giant Alcoa Inc., the first Dow component to report second-quarter earnings, beat analyst expectations. Earnings per share came in at six cents, beating reduced estimates of five cents. Revenue of US$5.96 billion beat expectations of $5.81 billion. Shares in the sector bellwether were up about 1.6 per cent in after hours trading.
And inflation figures for China showed the consumer price index at its lowest since January 2010. That will give Beijing leeway to continue adding stimulus to fight an economic slowdown. In a surprise move, China cut interest rates last week for a second time in a month.