(Adds fund manager comment, updates prices to close) By Alastair Sharp TORONTO, July 21 (Reuters) - Canada's main stock index took a step back from last week's all-time high on Monday, as a 3 percent jump in Valeant Pharmaceuticals International Inc was more than offset by declines across most major industries. A ratcheting-up of fighting in Ukraine and the Israel-Gaza conflict gave investors pause, with energy and mining stocks among the heaviest weights. But that overall caution - eight out of 10 main sectors ended in the red - was counterbalanced by Valeant, which gained amid an acrimonious battle for control of Botox maker Allergan. Valeant's acquisition target said it would cut jobs in order to remain independent. Valeant complained that Allergan has made false statements as the two companies bicker. Uranium miner Cameco Corp also moved sharply higher, up 4.2 percent to C$22.82. It had fallen last week on word that output at one of its mines would be delayed. But more broadly, investors wonder whether optimism about a faltering economic recovery is reflective of reality or if the good vibes could survive an external shock. "Markets are pretty complacent and have been riding an upward momentum trade," said Youssef Zohny, portfolio manager at Stenner Investment Partners of Richardson GMP in Vancouver. "Risk sometimes happens quickly and gets priced into the market, and we haven't seen that in a while," he said. The Toronto Stock Exchange's S&P/TSX composite index ended the session down 16.58 points, or 0.11 percent, at 15,249.99. The index hit 15,291.15 on Friday, its highest ever level. While the index held close to that record, investors weren't rushing out their buy orders amid several major geopolitical conflagrations. A train carrying the remains of most of the almost 300 victims of the Malaysia Airlines plane downed over Ukraine left the site on Monday as fighting flared in Donetsk, some 60 km (40 miles) away. [ID:nL6N0PW4ZE} Meanwhile, Israeli jets, tanks and artillery pounded Gaza and Palestinian militants fired rockets at Israel as the U.N. Security Council's calls for a truce were ignored. "Certainly the headline risks emanating from the geopolitical turmoil right now is dampening a little bit of investor enthusiasm," said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri. However, Fehr said he did not expect the hostilities to dent the global growth outlook, and that the Toronto index should rise further in a week light on economic data, especially if bellwether North American stocks report positive earnings. That outlook was not shared by Stenner's Zohny, who said there is a high probability of a move lower soon. "The markets have been pretty buoyant up here at record highs, and it wouldn't surprise us to see some sort of drawdown over the summer," he said. Cenovus Energy Inc slipped 1 percent to C$33.05, while Potash Corp was also down 1 percent, at C$38.35. ($1=$1.07 Canadian) (Reporting by Alastair Sharp; Editing by Peter Galloway and James Dalgleish)
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