The S&P/TSX composite index lost 24.5 points to 13,458.06.
The Canadian dollar was up 0.14 of a cent to 95.86 cents US as doubts about when the Fed might start tapering its US$85 billion of monthly bond purchases pushed the greenback lower.
New York markets put in a lacklustre performance following a strong start when indexes hit some notable milestones amid hopes that the U.S. Federal Reserve won't soon reduce monetary stimulus.
The Dow Jones industrials closed up 14.32 points to 15,976.02 after having crossed the 16,000 threshold for the first time, while the S&P 500 index declined 6.65 points to 1,791.53 after earlier moving past the 1,800 level. The Nasdaq came within as handful of points of breaching the 4,000-point mark but closed 36.9 points lower at 3,949.07.
There was relief on markets after Janet Yellen, who is slated to become the next Fed chairman, made it clear during confirmation hearings last week that she supports the Fed’s low interest-rate policies.
The focus on the Fed will pick up mid-week with the release Wednesday of the minutes from the Fed meeting late last month when the central bank judged the American economy still too weak to start tapering its asset purchases.
That meeting did nothing to lessen the uncertainty surrounding when the Fed might move, particularly as its sounded more positive about the U.S. economy.
Those bond purchases have kept bond yields low and encouraged people to buy into equities, resulting in a big stock boom on many markets this year.
Markets also found support Monday from China’s announcements of more details about its economic and social reform program, including opening state industries to greater competition, loosening its one-child policy and abolishing labour camps.
"It’s definitely a transition from (an export-driven economy) into a consumer driven country," said Sid Mokhtari, market technician at CIBC World Markets, "and that’s a great thing."
China’s leadership has faced pressure to update its economic model after growth slowed to a two-decade low in the second quarter.
Meanwhile, China is studying new ways to measure its economy. The proposed revision could boost the size of the country's estimate of its gross domestic product, which rose 7.7 per cent over the first nine months of the year from a year earlier.
The gold sector led decliners, down about 2.15 per cent as December bullion faded $15.10 to US$1,272.30 an ounce. Barrick Gold (TSX:ABX) lost 47 cents to C$18.43.
The energy sector was down 0.82 per cent and the December crude contract on the New York Mercantile Exchange shed 81 cents to US$93.03 a barrel, its lowest close since May 31. Canadian Natural Resources (TSX:CNQ) gave back 47 cents to C$33.63.
The base metals component drifted 0.79 per cent lower with December copper down two cents at US$3.15 a pound. HudBay Minerals (TSX:HBM) gave back 10 cents to C$7.93.
Financials led advancers, up 0.54 per cent with Sun Life Financial (TSX:SLF) ahead 54 cents to $37.43.
Fairfax Financial Holdings (TSX:FFH) has signed a deal to buy 51 per cent of the company that operates the Keg steakhouse chain restaurants for an undisclosed sum. Keg Restaurants Ltd. pays a royalty on sales to Keg Royalties Income Fund (TSX:KEG.UN) which holds trademarks and other intellectual property used by the restaurant chain. Fairfax stock slipped 97 cents to $426.88 while Keg Royalties units gained 10 cents to $16.26.
Industrials were also positive with Bombardier (TSX:BBD.B) ahead a penny to $4.65 as the transportation giant secured deals at the Dubai Airshow from two companies for its Q400 turboprop that could potentially be worth up to US$423 million. But the company has yet to announce any orders for its new CSeries aircraft at the event.
Bombardier announced the sales a day after Boeing (NYSE:BA) won orders worth almost US$100 billion for its planned 777X long-haul airliner.
Monday's weak showing followed solid gains on the Toronto and New York markets last week that left the TSX up about 8.5 per cent for the year so far and the Dow ahead 22 per cent.
Mokhtari said it seemed likely markets can hold onto those advances.
"The market has had a great run and as difficult as it sounds, it is still difficult to make a case for people to sell the market," he said.
"It’s one of those situations where momentum is leading the market as well as still the assumption that global liquidity is still in good standing, cost of capital is low, China is out with reform measures and it’s all pushing all the right keys for the market to be able to hold its gains."