TORONTO (Reuters) - Gains on the Toronto Stock Exchange fizzled out on Monday, and the main index closed slightly lower on profit-taking following a strong run-up spurred by record high oil prices.
The energy sector, which earlier rose by as much as 1.4 percent, finished up just 0.2 percent as crude eased back from of a new high near $120 a barrel in the wake of supply outages.
Petro-Canada PCA.TO was up 81 Canadian cents, or 1.6 percent, at C$50.13, while Suncor Energy (SU.TO) was down C$1.77, or 1.5 percent, at C$115.50.
Synenco Energy SYN.TO climbed C$1.18, or 15.2 percent, to C$8.97 after French oil major Total (TOTF.PA) said it had agreed to buy the Canadian company for about C$480 million.
The S&P/TSX composite index .GSPTSE closed down 18.02 points, or 0.13 percent, at 14,085.85 but the resource-laden materials sector was the only group on the downside. The benchmark had risen more than 100 points earlier in the day.
Analysts said investors were taking the opportunity to consolidate positions and lock in some profits, particularly after the nearly 140-point gain the index saw on Friday.
"Some of these things have been so strong, that the temptation is there to lock in some profits," said Fred Ketchen, director of equity trading at ScotiaMcLeod.
Fertilizer companies Potash Corp of Saskatchewan (POT.TO) and Agrium (AGU.TO) were among the biggest decliners by weight. Potash fell C$14.80, or 7 percent, to C$195.60, and Agrium was down C$5.94, or 6.6 percent, at C$84.36.
Shares of both companies have surged recently, particularly Potash Corp, which reported last week its first-quarter profit nearly tripled and upped its outlook for the rest of the year amid soaring demand and prices for fertilizer.
"I don't think there's a whole lot of downside risk to the stock right here, but there may be not a whole lot that propels it markedly higher," said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
The declines stung the overall materials sector, which fell 3 percent. The group was also weighed down by losses in the gold producers subindex, which gave up 1.6 percent.
Financials helped support the index as investors hoped that the worst of the credit crisis was passed. Canadian Imperial Bank of Commerce (CM.TO) was up C$1.04, or 1.5 percent, at C$72.54, while the sector as a whole rose 0.9 percent.
"I keep reading more and more about analysts' comments when you're looking at banking sector, particularly here, but also to a degree in the U.S., that the worst of all of these banking problems is over," Ketchen said.
While he said he's not convinced that that is the case, Ketchen noted: "We have been so pessimistic in that sector for such a long time that a little bit of optimism is a nice breeze of fresh air."
But Royal Bank of Canada (RY.TO) fell 20 Canadian cents, or 0.4 percent, to C$47.89 after Citigroup (C.N) cut its recommendation and target price for Canada's largest bank. Late in the day, RBC disputed the Citi report on potential writedowns in the second quarter, saying it contained "significant errors in fact" and overstated the risks and amount of any potential writedowns.
Market volume was 330 million shares worth C$6 billion. Advancers outpaced decliners 853 to 718. The blue chip S&P/TSX 60 index .TSE60 closed down 2.85 points, or 0.34 percent, at 834.45.
In New York, U.S. stocks were also little changed with the Dow Jones industrial average .DJI down 20.11 points, or 0.16 percent, at 12,871.75, and the Nasdaq Composite Index .IXIC up 1.47 point, or 0.06 percent, at 2,424.40.
Editing by Peter Galloway