The S&P/TSX composite index dipped 35.88 points to 14,432.38, pressured by lower gold and oil stocks as both commodities fell.
The Canadian dollar dropped 0.22 of a cent to 85.93 cents US.
Buying sentiment in both Toronto and New York got a big lift last week after the U.S. Federal Reserve said it would be "patient'' in deciding when to hike interest rates.
That sentiment carried over on Wall Street on Monday as the Dow Jones industrials gained 154.64 points to 17,959.44, while the S&P 500 index added 7.89 points to 2,078.54 — both record closes. The Nasdaq advanced 16.04 points to 4,721.42.
Traders are facing a much shorter trading week, with both Toronto and New York closing at 1 p.m. Wednesday for Christmas on Thursday. New York reopens on Friday but the TSX remains shut for Boxing Day.
The shortened week will likely result in "incredibly light" trading volumes, said Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis, Mo.
"In and of itself, that suggests there is a potential for big market swings or increased market volatility if, indeed, big news breaks," said Fehr.
"At the same time, barring any sort of any meaningful news or surprises coming from overseas markets, I wouldn't expect... a tremendous amount of market drivers this week. We're largely going to see investors move to the sidelines."
Major economic data expected this week includes the release of gross domestic product figures on Tuesday by both the United States and Canada.
Consensus estimates suggest that Canadian GDP slowed in October, advancing only 0.1 per cent month over month compared with September's growth of 0.4 per cent.
Fehr said the Canadian figures should continue to show a trend of modest growth going into 2015, but still lagging the U.S.
Meanwhile, traders digested comments from Saudi Arabia, which said it has no plans to cut crude production in the face of a global supply glut.
Oil price hit US$107 a barrel in June but have since plunged nearly 50 per cent as demand has waned and production increased. Crude prices seemed stabilize last week, suggesting they may have found a floor around the US$55-a-barrel level.
On Monday, the January crude contract on the New York Mercantile Exchange fell $1.87 to US$55.26.
Fehr said the decline in oil prices didn't necessarily mean it will be all bad news for the Toronto market, which is heavily weighted in oil and other resources.
"I think... we're seeing a break from just the performance of the stock index relative to commodities. That suggests investors are finding value in this market," he said.
"That's a very telling signal that investors are starting to become a little more opportunistic in this environment even despite the fact that oil prices could remain under pressure."
Meanwhile, the gold sector led TSX decliners, down 5.42 per cent as February bullion lost $16.20 to US$1,179.80 an ounce. March copper dipped a penny to close at US$2.88 a pound.
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