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The close: TSX slips as materials, financials weigh; pot stocks bounce

A trader works at his post on the floor of the New York Stock Exchange, (NYSE) on Jan. 8.

Brendan McDermid/Reuters

Canada's main stock index retreated on Monday as shares of some materials and financial services companies weighed, offset by gains for marijuana producers.

The Toronto Stock Exchange's S&P/TSX composite index unofficially closed down 31.79 points, or 0.19 per cent, at 16,317.65. Seven of the index's 10 main groups ended lower.

Canopy Growth Corp. rose 17.2 per cent to $39.86, Aurora Cannabis Inc. was up 5.6 per cent at $13.89, and Aphria Inc. was up 14.8 per cent at $21.99.

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Cannabis producers had dipped last week, capping a recent rally, after the U.S. Department of Justice rescinded a policy that had eased enforcement of U.S. federal marijuana laws in states that had legalized the drug. Canada is working toward legalizing recreational use later this year.

Industrials lost 0.1 per cent, with WestJet Airlines Inc falling 2 per cent to $25.50 after one of its planes was involved in an on-ground collision at a Toronto airport late on Friday. Larger rival Air Canada was off 3.2 per cent at $23.88.

The energy group declined 0.1 per cent on the day, while the materials group, which includes precious and base metals miners and fertilizer companies, fell 0.7 per cent.

Valeant Pharmaceuticals International Inc was down 3.2 per cent at $28.67, while Nutrien Ltd., the fertilizer company formed last week by a merger of Potash Corp of Saskatchewan and Agrium,  fell 3.3 per cent to $66.85.

The financials group slipped 0.3 per cent.

Sun Life Financial Inc. dropped 0.7 per cent to $51.61 and Manulife Financial declined 0.6 per cent to $26.50.

Royal Bank of Canada and Canadian Imperial Bank of Commerce both fell 0.4 per cent.

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The S&P 500 barely rose on Monday while the healthcare and financial sectors weighed and investors took a breather ahead of earnings season and after the strong rally that marked the start of 2018.

"It's just a reversal after a week of one-directional moves," said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

Stocks tied to economic growth outperformed more defensive ones last week.

"The news lies ahead in terms of economic reports, in terms of earnings and earnings warnings."

Attention in the United States now turns to the quarterly earnings season, with investors expected to focus on what U.S. companies will say about the recently approved tax overhaul and corporate tax cuts. Results from JPMorgan Chase are due Friday.

The Dow Jones Industrial Average fell 12.94 points, or 0.05 per cent, to 25,282.93, the S&P 500 gained 4.55 points, or 0.17 per cent, to 2,747.7 and the Nasdaq Composite added 20.83 points, or 0.29 per cent, to 7,157.39.

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With the New Year's Day holiday falling on a Monday this year, it was the strongest first four trading days of a year in more than a decade for all three major U.S. stock indexes, according to Reuters data. For the Dow, it was the strongest start since 2003 and for the Nasdaq and S&P 500 it was the strongest since 2006.

The pan-European FTSEurofirst 300 index rose 0.23 per cent and MSCI's gauge of stocks across the globe gained 0.07 percent.

A surprise dip in German industrial orders, which fell in November for the first time since July, appeared unlikely to dent growing confidence in the euro zone's biggest economy after a strong run of positive economic news.

Investors took profits in the euro after the common currency's recent rally.

The dollar index, which measures the greenback against six rival currencies, was up 0.45 per cent at 92.36.

The euro slipped 0.55 to $1.1962. The euro hit a nearly four-month high of $1.2089 last week.

"The euro got a little bit over its skis when it traded over $1.20," said Brad Bechtel, managing director FX at Jefferies in New York.

"It's a little bit of profit taking and some healthy correction going on the euro's side, which is driving some of the dollar trades," Mr. Bechtel said.

In the U.S. Treasury market, bond yields were modestly lower after data on Friday showing unexpectedly slower growth in U.S. hiring for December.

Benchmark 10-year notes last fell 2/32 in price to yield 2.4818 per cent, from 2.476 per cent late on Friday.

Gold retreated from last week's 3-1/2-month high as the U.S. dollar regained some ground against the euro. Spot gold was down 0.1 per cent at $1,318.84 an ounce.

Oil prices were little changed on Monday, trading near their highest since May 2015, as political concerns in some OPEC nations offset projections for higher U.S. oil production.

"Oil prices are finely balanced in today's trading session. Ongoing protests in Iran, together with recent detention of several princes in Saudi Arabia, have reinvigorated geopolitical concerns," Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London.

"However, prospects for further increases in U.S. oil production amid recent improvements seen in oil prices continue to promote bearish sentiment," Kumar said.

Brent futures gained 16 cents, or 0.2 per cent, to settle at $67.78 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 29 cents, or 0.5 per cent, to settle at $61.73.

Last week, both contracts rose to their highest since May 2015 with Brent at $68.27 and WTI at $62.21.

U.S. production is expected soon to rise above 10 million barrels per day, largely thanks to soaring output from shale drillers, according to federal energy data.

Only Russia and Saudi Arabia produce more.

"The U.S. oil price is now into a range that is anticipated to attract increased shale oil production," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"Traders may decide that discretion is the better part of valor while markets wait on evidence of what happens to the rig count and production levels over the next couple of months," Spooner said.

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