TORONTO - The Toronto Stock Exchange closed lower Monday but nowhere near the triple-digit drop it experienced earlier in the session amid concerns about recession in Europe.

The S&P/TSX composite index was down 30 points at 12,436.4 at the close but had been down as much as 128 points. About half of the sectors were in negative territory with the mining sector, down 2.4 per cent, leading the index lower.

The TSX Venture Exchange was down 5.4 points at 1,623.5.

The Canadian dollar lost 0.21 of a cent to 99.72 cents US.

Investors worried about future global demand for oil, copper and wheat if Europe slows further or the region falls back into recession.

The February gold contract on the New York Mercantile Exchange fell $1.20 to US$1,731 an ounce and copper shed six cents to US$3.82 a pound. The March oil contract was down 78 cents at US$98.78 a barrel.

Wall Street also moved off the lows of the session by Monday's close.

The Dow Jones industrial average was down 6.7 points at 12,653.7, while the broader S&P 500 index lost 3.3 points to 1,313 and the Nasdaq was off 4.6 points at 2,811.9.

The U.S. Commerce Department reported that consumer spending was flat in December despite a 0.5 per cent rises in incomes, the biggest increase in nine months. The economy relies heavily on consumer spending, and analysts say the economic recovery could stall and energy demand may stay weak if spending doesn't pick up.

"A potentially very busy week has started on a down note with stocks and commodities sliding as developments in Europe continue to overhang sentiment," said Colin Cieszynski, a market analyst at CMC Markets Canada.

"While it appears that parties continue to nudge toward a deal on a Greek debt swap for private lenders, some uncertainty has been emerging over longer-term issues ahead of today’s EU summit."

Heads of European state and government meeting in Brussels on Monday pledged to offer more training for young people to ease their transition to the work force, deploy unused development funds to create jobs, reduce barriers to doing business across the EU's 27 countries, and ensure that small businesses have access to credit. But they did not offer any new financial stimulus.

Over the course of Europe's two-year debt crisis, leaders have repeatedly tried to reassure investors by pledging to cut spending and reduce their deficits. But those austerity measures have hurt growth, and Europe is now facing a new recession.

The latest data showed Spain's economy shrank in the last three months of 2011.

Greece announced a tentative deal Saturday under which investors would swap out their Greek bonds for replacement bonds with half the face value. The deal is seen as a key for Greece to get €130 billion in bailout money and stay afloat, although officials say it could still fall apart.

Because Greece has been in recession for years, some experts fear it may need more rescue loans from its bailout partners — other eurozone countries and the International Monetary Fund — if it is to remain solvent.

In Canadian corporate news, RuggedCom Inc. (TSX:RCM), a maker of computers and networks for rugged applications, was one of the day's biggest gainers after it said it has found a white knight bidder to top a hostile takeover offer from St. Louis-based Belden Inc. The Canadian company announced early Monday that it has struck a deal with Siemens Canada Ltd. to sell the company for $33 a share, or about $382 million, topping the Belden offer of $22 or $272.4 million. Belden said it would let its offer expire and RuggedCom shares added 25 per cent or $6.60 to $32.85.

Mood Media Corp. (TSX:MM) shares also made strides. It said Monday that it expects fourth-quarter earnings to come in about 10 per cent above analyst expectations, sending it shares up more than 21 per cent, or 50 cents, to $2.85. The provider of sounds, sights and smells to the retail sector gave notice to its shareholders that earnings before interest, taxes, depreciation and amortization, or EBITDA, for the three months is projected to come in at $34 million.

Activist investor Vic Alboini is stepping down as chairman and CEO of pipe and tube maker Lakeside Steel Inc. (TSXV:LS) as the company heads towards a $57.8-million friendly takeover by Chicago-based steelmaker JMC Steel Group Inc. Shares fell less than a penny to 27.5 cents each.

Valeant Pharmaceuticals International Inc. (TSX:VRX) withdrew its offer of US$7.50 per share for Irvine, Calif.,-based ISTA Pharmaceuticals Inc. due to a "lack of progress." Valeant stock lost 21 cents to $48.96.

Specialty paper producer Catalyst Paper Corp. (TSX:CTL) says that one of the unions at its Crofton mill in B.C. has rejected a new contract that must be ratified as part of the company's new refinancing plan to stay alive. Its shares were down less than a penny.

Latest From ...