The Toronto stock market slipped Monday as a move by China to cool its red-hot economy weighed on mining shares.

The commodity-heavy S&P/TSX composite index lost 14.19 points to 12,196.51 after China forced banks to increase their reserves in the country's ongoing effort to curb inflation and avoid speculative real estate bubbles.

Investors are afraid the move will slow China's economic growth and imperil the global economic recovery by cutting demand for resources such as those produced by Canada's mining companies, said Scotiabank commodities analyst Patricia Mohr.

"Every time they tighten policy there is some concern that it might slow demand for base metals in China, so you're getting the copper prices moving down because of that," Mohr said.

The Toronto base metals sector plunged 3.6 per cent, while the May copper contract on the New York Mercantile Exchange fell 5.9 cents to US$3.28 a pound. Shares in Teck Resources Ltd. (TSX:TCK.B) fell $1.12 or nearly three per cent to C$38.80.

Gold shares also lost significant ground even as the June gold contract on the New York Mercantile Exchange gained $2.60 to US$1,183.30 an ounce. Weighing on the sector was news that the Australian government has proposed a new tax on the profits of resource companies.

The 40 per cent tax proposed by Prime Minister Kevin Rudd targets mining companies that have made bumper profits as burgeoning demand from manufacturers in China and India has pushed up the price of various commodities. Shares in Barrick Gold Corp. (TSX:ABX), which owns several mines in Australia, lost 96 cents to C$43.34.

Materials stocks have been on a seemingly unstoppable run for months now, and this is also likely putting pressure on Toronto's mining sectors, said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

"If you look around the world I bet you the whole materials sector is down a fair bit because it's run up so much in the last year," Nakamoto said.

"People will take profits when there's a pause in the markets. Second, it tends to be one of the most volatile sectors out there, so when the markets are running up people get involved in that, and when the markets are cooling off or pausing, people get out of that pretty quickly."

Energy stocks on the TSX added 0.1 per cent as the June crude contract on the New York Mercantile Exchange edged up four cents to US$86.19 a barrel. Concerns over supply as a result of an oil-well leak in the Gulf of Mexico were reinforced by data indicating that the U.S. economic recovery is strengthening.

The financial sector added 0.5 per cent after the German cabinet backed legislation that would provide Greece with billions in aid as part of an EU-International Monetary Fund bailout plan.

Shares in Scotiabank (TSX:BNS) added 91 cents to C$52.69 after the bank announced Friday that it had agreed to buy all the assets and deposits of R-G Premier Bank in Puerto Rico, which was shut down by U.S. regulators.

The loonie added 0.51 of a cent to 98.95 cents US.

The TSX Venture Exchange lost 8.26 points to 1,665.54.

On Wall Street, markets soared following news of a US$3-billion, all-stock merger of United and Continental which, if completed, would create the largest airline in the world.

The Dow Jones industrial average rose 143.22 points to 11,151.83. The Nasdaq gained 37.55 points to 2,498.74 and the S&P 500 added 15.57 points to 1,202.26.

In economic news, a U.S. Commerce Department report showed that personal spending rose 0.6 per cent in March, the biggest jump in five months and another sign of economic recovery. The report also showed, however, that personal income rose just 0.3 per cent, renewing concerns that growth in spending could slow if wages don't increase faster.

And the Institute for Supply Management said the U.S. manufacturing sector expanded at its fastest pace in April in nearly six years as factories continued to lead the economy's rebound.

In Canadian corporate news, Shaw Communications (TSX:CJR.B) announced it will become one of Canada's pre-eminent entertainment companies by buying a restructured Canwest Global Communications (TSXV:CGS) through a series of transactions totalling C$2 billion.

Shaw's stock fell 37 cents to $18.72 while Canwest's shares lost six cents to 10 cents.

Canwest's newspapers are being sold under a separate process. Torstar Corp. (TSX:TS.B) said it has submitted a bid but the Toronto-based media company, which owns the Toronto Star, is expected to have competition. Torstar shares added 12 cents to $11.29.

And shares of Angiotech Pharmaceuticals, Inc. (TSX:ANP) jumped 10 cents or nearly nine per cent to $1.23 after the Vancouver-based company said its Quill knotless suture system will be distributed in the United Kingdom, Ireland and France by B. Braun.