TORONTO - The Toronto stock market closed with a slight loss Monday, weighed down by financials amid more bad news from the European banking sector while gold stocks faltered even as bullion hit another record high.

The S&P/TSX composite index shed 14.26 points to 12,190.6 while the TSX Venture Exchange was off 4.92 points to 1,694.63.

The Canadian dollar slipped a quarter of a cent to 97.25 cents US.

The Toronto financial sector was the biggest decliner as Moody's Investors Service cut its rating on Anglo Irish Bank Corp., one of Europe's more troubled banks in recent months. Royal Bank (TSX:RY) fell 45 cents to $53.04.

The gold sector was also a major decliner even as bullion prices climbed to a new record close. The December bullion contract on the Nymex rose 50 cents to US$1,298.60 an ounce. Gold has closed at a series of record highs during September as investors look for a hedge against fears of inflation and U.S. currency weakness. Kinross Gold Corp. (TSX:K) lost 19 cents to C$19.24 while Barrick Gold Corp. (TSX:ABX) faded 45 cents to $47.

The TSX base metal sector was the strongest group, up one per cent even as December copper in New York drifted two cents lower at US$3.60 a pound. Teck Resources (TSX:TCK.B) rose 80 cents to C$41.15 and Lundin Mining (TSX:LUN) advanced 18 cents to $4.92.

But there was also a defensive stance on the market as the utilities sector was the second-biggest driver, up 0.43 per cent with Emera Inc. (TSX:EMA) ahead 56 cents to $28.89.

The TSX energy sector was ahead 0.36 per cent while the November crude contract on the New York Mercantile Exchange inched up three cents to US$76.52 a barrel. Cenovus Energy (TSX:CVE) climbed 30 cents to C$29.04 while Canadian Natural Resources (TSX:CNQ) improved 33 cents to $34.23.

The tech sector was also positive with Macdonald Dettwiler (TSX:MDA) ahead 59 cents to $44.51 and Celestica (TSX:CLS) up 43 cents to $8.80.

But Research In Motion Ltd. (TSX:RIM) was down 44 cents to $49.67. After the close, the BlackBerry maker unveiled details of a new tablet computer aimed at competing with Apple Inc.'s iPad. Stocks have rallied throughout the month, driven by higher confidence that the economic revival is on track even as economic growth slows from earlier this year. Economic reports have regularly topped modest forecasts and a strong U.S. durable goods orders report pushed stocks higher last week. Mergers and acquisitions activity has also picked up. The TSX's main index is up about 2.4 per cent for September, which is historically the weakest trading month of the year, while the Dow Jones industrial average is up 8.4 per cent for the month. However, both indexes are up about four per cent year-to-date, raising questions about what it would take for gains to continue in the last three months of the year.

"We're going to need some indication of some half-decent news somewhere along the way, whether it be in the economy or whether it be in more announcements from listed companies about earnings and outlooks and that kind of thing," said Fred Ketchen, manager of equity trading at Scotia Capital.

"We're in for narrow-range trading for the next while."

Profit-taking from the month's solid gains also weakened New York markets. The Dow Jones industrial average lost 48.22 points to 10,812.04. The Nasdaq composite index lost 11.45 points to 2,369.77 while the S&P 500 index was 6.51 points lower to 1,142.16.

Investors also turned their attention to a batch of merger and acquisition activity for insight into the health of the economy.

Consumer products maker Unilever NV has agreed to buy beauty products maker Alberto Culver Co. for US$3.7 billion. Wal-Mart Stores Inc. proposed to buy South African consumer goods distributor Massmart Holdings Ltd. for approximately US$4.25 billion. And Southwest Airlines Co. will purchase AirTran Holdings Inc. for about US$1.4 billion.

Michael Sansoterra, portfolio manager of the RidgeWorth Large Cap Growth Fund in New York, said the latest deals are a sign companies are confident economic growth will pick up in the coming quarters. Acquisition activity has been booming this month as companies become more willing to invest large cash reserves built up during the recession.

"The timing is never certain, but smart companies are saying, 'If not now, when?"' Sansoterra said. "This is the time to be doing it."

In other corporate news, a U.S. court will hear PotashCorp's (TSX:POT) lawsuit against BHP Billiton, despite the Anglo-Australian mining giant's attempt to have the case thrown out. A federal district court judge in Chicago has scheduled a hearing for Nov. 4. PotashCorp is suing BHP for allegedly driving down its share price over several years so it could be acquired on the cheap. PotashCorp has called BHP's US$38.6-billion offer "coercive." Potash shares were ahead $1.07 to C$150.46.

Scotiabank (TSX:BNS) declined 29 cents to $53.56 as the bank announced that is acquiring Royal Bank of Scotland's corporate and commercial banking operations in Chile. Financial terms of the deal weren't disclosed and Scotiabank described them as "not financially material."