Source: The Canadian Press

The Toronto stock market turned negative late in the session Monday as a weak performance by the financial sector overshadowed strength in energy and gold stocks.

The S&P/TSX composite index shed 8.18 points to 13,193.28, while the TSX Venture Exchange added 12.71 points to 2,147.15.

The Canadian dollar lost 0.35 of a cent to 98.39 cents US as the greenback picked up strength against most major currencies.

The financial sector, led by Bank of Montreal (TSX:BMO) and Toronto-Dominion Bank (TSX:TD), was a drag on the TSX.

Shares in BMO fell 2.4%, or $1.40, to $56.60 following Friday’s announcement that it is buying Wisconsin-based bank Marshall & Ilsley Corp. (NYSE:MI) in a deal worth US$4.1 billion. That has prompted Moody’s Investor Services to launch a review of BMO for a possible downgrade.

Shares in TD shed value late Monday afternoon after reports surfaced that it was looking to buy lender Chrysler Financial. Its stock fell 2.3% or $1.68 to $70.52.

Gold and energy stocks were among the biggest gainers on the TSX as global gold and oil prices increased.

The February gold contract on the New York Mercantile Exchange gained $6.90 to US$1,386.10 an ounce, while the March copper contract added five cents to US$4.21 a pound.

The January crude contract rose 79 cents to US$88.81 a barrel.

Energy equities are likely catching up to oil prices that have been moving higher lately and could be one of the largest areas of growth on the market over the next several months, said John Johnston, chief strategist at The Harbour Group.

“People are making bets that energy is going to play catch-up after a lengthy period of disappointing performance in light of what’s been happening with oil prices,” he said.

Markets entered a week that’s expected to experience low trading volumes in advance of the Christmas holidays.

Johnston said the TSX should remain relatively strong as stocks get a last minute boost before trading settles for the year. The next two weeks will be fairly quiet with no big economic indicator announcements for the rest of the year.

“Anything that happens will be more event driven, the kind of thing where you wake up and something has happened, rather than responding to an anticipated event like an economic release or an earnings report,” he said.

Talisman Energy Inc. (TSX:TLM) shares gained 5% to their highest level in 2 1/2 years after it announced it will sell a 50% working interest in its Farrell Creek gas field in British Columbia to South African energy and mining giant Sasol Ltd. in a $1.05-billion development agreement. Its stock was up $1 to $21.89.

NovaGold Resources Inc. (TSX:NG) shares rose 85 cents, or 6%, to $14.86 after announcing it plans an all-stock, $34.1 million takeover of Copper Canyon Resources Ltd. (TSXV:CPY). Copper Canyon stock was up 32 cents, or 76.19%, at 74 cents on the TSX Venture market.

Still, the mining sector was also among those in the red.

Duluth Metals Ltd. (TSX:DM) shares fell 3%, or eight cents, to $2.72 after it said it has agreed to pay $77 million to acquire Franconia Minerals Corp. (TSX:FRA), which explores properties in northeastern Minnesota. Franconia shares gained 32%, or 20 cents, to 82 cents.

ArcelorMittal has signed a deal to increase its friendly takeover bid for Baffinland Iron Mines Corp (TSX:BIM) to $1.25 per share, up from an earlier offer of $1.10. The increased offer, worth about $492 million, comes in the face of a hostile bid by Nunavut Iron Ore Acquisition Inc., a subsidiary of private equity investor Energy & Minerals Group, of $1.35 per share. Baffinland shares were down a penny at $1.31 apiece.

Statstics Canada releases its November reading on the Consumer Price Index on Tuesday and it could provide an indication of what the Bank of Canada may do about interest rates in 2011.

U.S. markets were mixed after spending much of Monday in a funk after three straight weeks of gains as enthusiasm faded over a freshly signed tax-cut package.

President Barack Obama signed a US$858-billion package Friday renewing tax cuts for another two years and extending expiring unemployment benefits through next year. The package is expected to boost U.S. economic growth.

The Dow Jones industrial average fell 13.78 points to 11,478.13 while the Nasdaq added 6.59 points to 2,649.56 and the S&P 500 gained 3.17 points at 1,247.08.