The S&P/TSX composite index closed off the lowest levels of the session, coming back from a 174-point tumble to lose 49.85 points to 14,976.92 after falling 1.55 per cent last week.
The Canadian dollar rose 0.01 of a cent from Friday's close to 89.66 cents US.
U.S. indexes also finished the session off the worst levels of the day wth the Dow Jones industrials down 41.93 points to 17,071.22 after losing one per cent last week. The Nasdaq fell 6.34 points to 4,505.85 and the S&P 500 index declined 5.05 points to 1,977.8.
TSX miners led decliners after China reported a 0.6 per cent fall in industrial company profits in August, indicating economic growth might be declining further. Despite improved September manufacturing data, analysts said declining industrial production, lower property prices, weaker imports and pressure on factory prices are pointing to softening economic conditions.
Markets are set to exit September trading lower as investors wonder if the U.S. central bank will move before the middle of next year to raise rates from near zero, where they have been since the 2008 financial collapse. Worries about the pace of global economic growth have also made for volatility during September. However, markets have been labouring under these interest rate and economic growth worries for months.
"I don’t think a whole lot has really changed," said David Wolf, a portfolio manager in the Global Asset Allocation group at Fidelity Investments.
"We have been worried about China for some time from a longer-term point of view. But we have also generally been of the view that the government has the tools it needs to manage the excesses in the financial and property sectors. And on the Fed side, people tend to want to see things between the lines and conspiracy theories and little nudges and winks that for the most part really aren’t there."
September also has a reputation as the worst trading month of the year.
The TSX is down about four per cent for September, led by drops in the energy and mining sectors. The showing has left the main Toronto index still up almost 10 per cent year to date.
Worries about slowing Chinese growth pushed the base metals component down 1.7 per cent while December copper was ahead two cents at US$3.06 a pound. HudBay Minerals (TSX:HBM) ran up 30 cents or three per cent to $9.62.
The gold sector faded one per cent while December bullion gained $3.40 to close at US$1,218.80 an ounce.
Financials were also weak, down 0.7 per cent with Royal Bank (TSX:RY) down 87 cents to $79.57.
The energy segment gained 0.4 per cent amid a major acquisition. Encana Corp. (TSX:ECA) is buying Athlon Energy in a US$7.1 billion friendly takeover deal that will give the Canadian gas producer access to a major Texas oil play and speed up its shift towards more liquids production. Encana shares gained 47 cents to $24.06.
The November crude contract on the New York Mercantile Exchange climbed $1.03 to US$94.57 a barrel.
Also adding to market caution were escalating pro-democracy protests in Hong Kong, raising concerns that business in this Asian financial hub might be disrupted. Thousands of people have taken to the streets in a challenge against Beijing’s decision to limit political reforms.
"There are worries out there in the market and people are slightly skittish and when you get news flow like that, it’s going to reinforce that kind of sentiment," added Wolf.