TORONTO - Stock markets are expected to remain volatile in the shortened trading week ahead of Christmas, as investors clean up their books before the start of the new year.

Motivation will come from the turbulent commodity prices which proved especially unpredictable last week as the U.S. dollar bounced around in value.

Traders will also be making last-minute trades to meet the tax-loss trading deadline for the year.

"There's a whole bunch of conflicted forces at work," said John Johnston, chief strategist at the Harbour Group at RBC Dominion Securities.

"The U.S. economy is showing pretty decisive indications that it's in an economic recovery, but a very slow one. The general trend in the economy is supportive for equity markets, but at the same time expectations have risen."

Stock markets will operate on a regular trading schedule until Christmas Eve, on Thursday, when they close at 1 p.m. ET on both sides of the border, and remain closed for Christmas.

Economists and observers have predicted trading this month would be relatively muted compared with previous years partly because the TSX rallied in early November to a high for the year and since then many traders have taken time off for the holiday season.

Toronto's S&P/TSX composite index budged just 39 points last week, closing at 11,463.40 on Friday.

However, commodities should provide motivation in the holiday-shortened week.

Last week, the Iraqi government said that an oil well had been taken over by a group of armed Iranians, which sent the February crude contract up slightly in the final hours of trading.

The materials sector was also under pressure as shares in Potash Corp. of Saskatchewan (TSX:POT) lost six per cent of their value on concerns over future potash prices.

And gold prices have also logged several sessions of turbulence over the past week on the director of the U.S. dollar.

On the economic front, Canadian retail sales numbers for October will be released on Monday, with consensus forecasts predicting a 0.8 per cent rise month-over-month, according to TD Economics.

"Canadian households have kept the cash tills busy in recent months with retail sales activity rising at 1 per cent (month-over-month) or better... in four of the last five months," wrote Millan Mulraine of TD in a note.

On Wednesday, Canadian real GDP numbers for October will be released with consensus predictions targeting a modest 0.3 per cent gain for the month, on stronger manufacturing and housing market activity.

In the United States, durable goods orders will be released on Thursday, with expectations suggesting a 0.5 per cent increase for the month.

"Although durable goods orders are still down by over 10 per cent versus year ago levels, thy are slowly and steadily clawing their way back from a recessionary trough," wrote Meny Grauman of CIBC World Markets.

Also, U.S. personal income and consumer spending will be released on Wednesday, and is expected to show that personal consumption was up 0.8 per cent for November, despite the economy.