TSX up modestly in light trading

The Toronto Stock Exchange moved higher as a result of strength in the energy andcommodity sectors Monday, even as the Canadian dollar lost roughly half a cent.

The benchmark S&P/TSX composite index sat at 13,241 in the afternoon,up 39.9 points on the session in light trading.

Shares in Talisman Energy Inc. were five per cent higher after the energy company reached a deal with South African gas conglomerateSasol Ltd. to sell the latter some shale gas assets in British Columbia. PotashCorp was two per cent higher toalmost $143 per share after news of a merger between Russian rivals emerged.

The Talisman deal in particular "is positive for Canadian stocks," Louisbourg Investments Inc. money manager Mathieu Roy told Bloomberg. "It suggests the moneys there to develop. A lot of Canadian companies with North American resources can grow them more quickly because they wont have any trouble finding partners."

"People are making bets that energy is going to play catchup after a lengthy period of disappointing performance in light of what's been happening with oil prices," said John Johnston, chief strategist at the Harbour Group.

There are no big economic indicator announcements for the rest of the year, but Johnston predicts the TSX should perform well this week as stocks get a last-minute boost before trading settles for 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.

The financial sector, frequently a source of strength for the TSX, was a drag on Monday. Shares in BMO fell 2.5 per cent, or $1.42, to $56.58 following Friday's announcement that it is buying Wisconsin-based bank Marshall & Ilsley Corp. in a deal worth $4.1 billion US.

That has prompted Moody's Investor Services to launch a review of BMO for a possible downgrade.

Elsewhere, the Dow Jones industrial average added 15.5 points to 11,507.4 and the Nasdaq fell 8.12 points to 2,651.09. The S&P 500 added 4.15 points at 1,248.05.

World stock markets were also mixed Monday as investors watched with unease as South Korea went ahead with a military exercise on a frontline island despite threats of North Korean retaliation.

The Canadian dollar lost 0.48 of a US cent to 98.26 cents US as the greenback picked up strength against most other major currencies. The loonie declined against most major peers after Statistics Canada revealed data showing Canadian wholesale prices unexpectedly stalled in October.