Source: The Canadian Press

The Toronto stock market closed little changed Monday with financials providing lift a day before the start of a slew of quarterly earnings from the big banks, while mining stocks dragged amid soft commodity prices.

The S&P/TSX composite index dipped 3.44 points to 11,718.63 while the TSX Venture Exchange was down 4.29 points at 1,475.33 amid lower than usual volumes.

“We are still in that summer doldrums, pretty much for the month of August, the entire continent of Europe is on vacation so we have a lot of normal trading activity not happening this time of year,” said Kathryn Delgreco, investment adviser at TD Waterhouse.

“There’s a lot of pulls and a lot of pushes going on in the market and the volume isn’t there, and let’s face it, it’s far easier to look on the pessimistic side of things when we came off two strong quarters.”

The Toronto market enjoyed limited lift from market heavyweight PotashCorp after the fertilizer giant’s board rejected a hostile US$38.6-billion takeover bid from Australian miner BHP Billiton.

Shares in PotashCorp (TSX:POT) — the sixth most heavily-weighted stock on the TSX — closed well off earlier levels, rising $1.11 to $158.17.

PotashCorp also said it expected “superior offers or other alternatives” to emerge and that it had been in touch with a number of third parties “who have expressed an interest in considering alternative transactions.”

BHP Billiton has said it planned to take its offer directly to the shareholders of the Saskatchewan-based company.

“I don’t blame them (BHP) for being opportunistic, but definitely we think the valuation of PotashCorp should be much higher,” added Delgreco.

“But that’s what M&A activity is all about. Those that have capital at a time when valuations are still depressed, that’s when you see M&A activity crawl out of the woodwork.”

The Canadian dollar lost early momentum to move down 0.32 of a cent to 95.03 cents US.

The TSX financial sector was slightly higher a day before the big banks start reporting earnings. Four of the big banks report fiscal third-quarter results this week, with Bank of Montreal (TSX:BMO) kicking things off Tuesday. BMO stock gained 51 cents to $59.06.

The five big financials raked in a collective $5.01 billion in second-quarter profits — down from $5.09 in the first quarter — and analysts think they will be hard pressed to turn in similar earnings this time out as economic growth slows in general and tepid stock markets affect their capital markets businesses.

The TSX telecom sector was the biggest advancer, up 1.6% with Telus Corp. (TSX:T) ahead 95 cents at $43.56 while BCE Inc. (TSX:BCE) was up 77 cents at $33.47.

The TSX energy sector was little changed as the October crude contract on the New York Mercantile Exchange gave up early gains and declined 72 cents to US$73.10 a barrel. Cenovus Energy (TSX:CVE) improved 23 cents to C$26.69.

The industrials sector led decliners, down 1% with shares in transport giant Bombardier (TSX:BBD.B) down 10 cents to $4.46 after it said more than 70% of its Q400 aircraft needed to be inspected after cracks were found in a part near but not related to the functioning of the turboprop’s landing gear.

Gold stocks also moved lower as the December gold contract on the New York Mercantile Exchange edged down 30 cents to US$1,228.50 an ounce. Barrick Gold Corp. (TSX:ABX) was off 52 cents at C$46.38.

Other commodity prices were soft with September copper on the Nymex unchanged at US$3.29 a pound. The base metals sector lost early gains built partly on hopes that other companies might be bought up with rich share premiums. But Lundin Mining (TSX:LUN) was still up nine cents at C$4.21.

New York markets were weak on continued skepticism about the strength of the economy.

In New York, the Dow Jones industrials lost 39.21 points to 10,174.41

The Nasdaq composite index lost 20.13 points to 2,159.63 while the S&P 500 was down 4.33 points to 1,067.36.

Markets had earlier found lift from other merger and acquisition activity.

Brookfield Infrastructure Partners LP (TSX:BIP.UN) has announced plans to take over Prime Infrastructure (ASX:PIH) in a deal that values the Australian company at US$1.4 billion. Brookfield, which already owns 40% of Prime, says the deal will create a leading global infrastructure company. Its units gained 17 cents to C$18.16.

HSBC Holdings PLC is in talks to buy a controlling stake in Nedbank Group Ltd. of South Africa from Old Mutual PLC for as much as US$6.8 billion. HSBC shares rose 14 cents to US$49.44 in New York.

And Hewlett-Packard (NYSE:HPQ) is making a bid of US$24 per share for data storage provider 3Par just a week after HP rival Dell (Nasdaq:DELL) agreed to acquire the company. Hewlett-Packard Co. and Dell Inc. both have been looking to expand beyond personal computers over the past few years in search of bigger profits. HP’s bid tops Dell’s offer of US$18 per share.

Hewlett Packard shares dipped 81 cents to US$39.04 and Dell shares lost 13 cents to US$11.94 , while 3Par (NYSE:PAR) stock soared 44.6% to US$26.09.

Potential acquisitions are a sign that companies are confident the economy will grow and business will improve in the coming quarters.

“A company using their cash has got to be somewhat optimistic about the economy going forward,” said Frank Ingarra, co-portfolio manager of Hennessy Funds in New York. But Ingarra said there are still plenty of worries about the economy, “which will likely keep a lid on big moves in the market.”

In other corporate news, Casey’s General Stores in the U.S. has appealed directly to its shareholders to reject Alimentation Couche-Tard’s (TSX:ATD.B) hostile takeover bid and its slate of director candidates.

Chief executive Robert Myers argued that Casey’s board is acting in the best interests of all shareholders by rejecting the Montreal company’s US$36.75 per share offer, saying Casey’s shares have outperformed industry rivals and the markets while delivering strong returns and high dividends over the past few years. Couche-Tard’s shares dipped 50 cents to $20.89.