TORONTO - The Toronto stock market closed lower, led by sliding commodity stocks as investors worried about the Chinese economy faltering.

The S&P/TSX composite index fell 109.76 points to 10,868.21 even as Statistics Canada reported that gross domestic product increased by 0.1 per cent, the first time GDP has grown since July, 2008, following a 0.5 per cent dip in May.

China's main Shanghai market retreated almost seven per cent Monday, fed by concerns over a tightening in bank lending that could hurt that country's economy.

"Markets around the world are taking their cue from the Shanghai market," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

"(They were) the first economy that showed signs of coming down and then going up, the rest of the markets followed so it's a harbinger of what's going to happen here in the short term."

China, which has continued to grow despite the global recession, is a major consumer of Canadian exports including commodities.

Chinese stockpiling this year of such goods as copper and soy have helped drive up commodities prices and take the Toronto market up more than 40 per cent from the lows of early March.

For the second quarter as a whole, Canadian GDP decreased 0.9 per cent, a less pronounced rate of decline than the 1.6 per cent drop in the previous quarter.

The Canadian dollar headed 0.26 of a cent lower to 91.32 cents US.

"The upturn in June GDP, the swift snapback in housing amid rebounding consumer confidence, and a stabilizing U.S. economy all suggest that Canada's recession is indeed ending," said BMO Capital Markets deputy chief economist Doug Porter.

Energy stocks in particular pressured the Toronto market, with the sector down two per cent. The October crude contract on the New York Mercantile Exchange fell $2.78 to US$69.96 a barrel.

EnCana Corp. (TSX:ECA) declined $1.39 to $57.06 while Canadian Natural Resources (TSX:CNQ) lost $1.75 to $62.71.

The TSX Venture Exchange declined 13.47 points to 1,175.24.

New York markets were also negative as the Dow Jones industrials moved 47.92 points lower to 9,496.28.

The Nasdaq composite index was down 19.71 points to 2,009.06 and the S&P 500 index was down 8.31 points to 1,020.62.

Investors were cautious as August trading ended, looking for some sort of catalyst to give the stock market rally that started in March another leg.

Key readings will be released this week on manufacturing and employment in August that have the ability to either sustain or upset the rally.

The most important piece of data this week is the U.S. government's monthly jobs report on Friday. Economists are expecting another 220,000 jobs were lost, down from 247,000 in July. Last month's report showed an unexpected dip in the unemployment rate and investors are anxious to see if the rate continues to fall.

Canadian employment data for August is also released on Friday. Economists expect a drop of about 20,000 jobs during the month.

Other commodity prices slid with the December bullion contract down $5.30 to US$953.50 an ounce while September copper fell 11.5 cents to US$2.808.

The base metals sector moved down 2.7 per cent as Teck Resources (TSX:TCK.B) declined $1.13 to $26.42 and HudBay Minerals (TSX:HBM) slipped 13 cents to $8.44.

The gold sector was off 1.65 per cent and Kinross Gold Corp. (TSX:ABX) faded 76 cents to $20.78.

Industrial stocks were also a major weight, down two per cent with Canadian Pacific Railroad (TSX:CP) down $2.28 to $52.42 and Bombardier Inc. (TSX:BBD.B) dipped six cents to $4.

In corporate news, privately-held Calgary firm Athabasca Oil Sands Corp. said Monday PetroChina plans to take a 60 per cent stake in the MacKay River and Dover oilsands projects in an investment worth nearly $2 billion. Rumours of a deal pushed up shares in a few smaller oil sands companies, including UTS Energy Corp. which holds a 20 per cent stake in the Fort Hills oilsands project. UTS shares ran ahead 17 cents or 10.49 per cent to $1.79.

Oilfield services company Baker Hughes Inc. said it will buy BJ Services Co. in a cash-and-stock deal valued at US$5.5 billion. Baker Hughes shares fell $3.67 to US$34.42.

The Walt Disney Co. says it is acquiring Marvel Entertainment Inc. for US$4 billion in cash and stock, bringing characters like Iron Man and Spider-Man into the Disney family. Disney shares were off 81 cents to US$26.03.