Source: The Canadian Press

The Toronto stock market closed little changed Monday as investors braced for a trio of market-moving developments out of the United States this week, including mid-term elections, an announcement on economic stimulus from the Federal Reserve and the latest jobless data.

The S&P/TSX composite index closed 11.43 points lower at 12,664.81, with support coming from the commodity sector following a report showing that Chinese manufacturing accelerated in October, raising hopes for higher demand for oil and metals.

But early gains were eroded as financials, telecoms and gold stocks lost ground.

The TSX Venture Exchange declined 16.23 points to 1,934.08.

Advancing commodity prices gave the Canadian dollar a boost, rising 0.4 of a cent to 98.42 cents US.

“The news has been quite strong out of China and I think the focus right now is really (on) one of the few areas of the world showing really strong growth, . . .” said Kate Warne, Canadian markets specialist with Edward Jones in St. Louis.

“And people of course are quite worried that after a period of strong growth, the (Chinese) government has said they would like it to slow down. No one is sure: can they engineer a slight slowdown versus a big slowdown.”

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose to 54.7 in October from 53.8 September and 51.7 in August. Monthly readings have stayed above 50, the benchmark for expansion, for 20 straight months, it said.

A competing index, the HSBC China Manufacturing PMI — a seasonally adjusted index designed to measure the performance of the manufacturing economy — rose to a six-month high of 54.8 in October from 52.9 in September.

Strong demand from Chinese industries for oil and metals such as copper has been a major driver of commodity prices and in turn energy and mining stocks on the resource-heavy TSX.

The solid Chinese manufacturing data pushed the December crude contract on the New York Mercantile Exchange up $1.52 to US$82.95 a barrel. The energy sector gained 0.36% and Suncor Energy (TSX:SU) improved by 35 cents to C$33.03.

Shares in Imperial Oil (TSX:IMO) dipped five cents to $39.17 after the integrated oil and gas company said its quarterly net profit dropped 24% to $418 million from $547 million in the comparable 2009 period.

The base metals segment rose 0.44%, with the December copper contract on the Nymex ahead five cents at US$3.79 a pound. Shares in Canadian miner Sherritt Intl. (TSX:S) gained 30 cents to C$8.23, while Equinox Minerals Ltd. (TSX:EQN) rose 13 cents to $5.67.

Financials led TSX decliners, down 0.46% with CIBC (TSX:CM) off 65 cents at $77.58.

Gold stocks also dragged the TSX lower with the December bullion contract down $7 to US$1,350.60 an ounce. Goldcorp Inc. (TSX:G) faded 45 cents to $45.09.

The telecom sector also weighed on the TSX as Telus Inc. (TSX:T) shed 29 cents to $44.91.

Market heavyweight Research In Motion Ltd. (TSX:RIM) was also a weight, down $1.01 at $57 as investors took some profits after sending the stock 15% higher last week.

Investors were also relieved at data from the Institute for Supply Management, which showed stronger than anticipated U.S. manufacturing activity in October. The ISM manufacturing index rose to 56.9 in October from 54.4 a month earlier.

Meanwhile, investors are looking to the main event of the week. On Wednesday, the U.S. Federal Reserve is expected to pump more money into the world’s largest economy to boost a feeble recovery.

It is widely expected the Fed will announce a Treasury bond buying program on Wednesday known as quantitative easing, to inject more liquidity into the economy.

New York markets also closed flat as Dow Jones industrial average was ahead 6.13 points at 11,124.62. The Nasdaq composite index moved down 2.57 points to 2,504.84 and the S&P 500 added 1.12 points to 1,184.38.

In corporate news, shares in Potash Corp. of Saskatchewan (TSX:POT) were little changed as British media reports said BHP Billiton may be ready to sweeten its hostile, US$38.6-billion takeover bid for the fertilizer giant.

The Sunday Times in London cites sources close to the deal as saying BHP’s $130-a-share offer could be raised by as much as 10%.

The Canadian government is set to rule to rule on whether it will approve the deal, which would be the largest takeover in Canadian history. PotashCorp shares gained $1.20 to $148.70.

Saputo Inc. (TSX:SAP) beat expectations in the second quarter as the Canadian dairy and cheese company’s net earnings increased 32.8% to $125 million.

Revenues were $1.56 billion, up from $1.48 billion in the same quarter a year earlier. Shares in Saputo dipped a dime to $38.88.

Angiotech Pharmaceuticals, Inc. shares plunged 20 cents or 40% to 30 cents Monday morning in the first trading since the Vancouver-based company (TSX:ANP) announced a recapitalization plan after markets closed last week.

Western Copper Corp. (TSX:WRN) shares jumped 11 cents or 7.48% to $1.58 after the Vancouver-based company reported a “significant resource increase” at its Casino copper-moly project in the Yukon.