A day after world leaders pledged to rein in their budget deficits at the G20 summit in Toronto, investors reacted coolly to the prospect of a new age of austerity.

A person's shadow is cast on a display showing stock market prices inside a securities bank in Taipei earlier this month. Investor reaction to the G20 summit's outcome was largely cool on Monday. (Pichi Chuang/Reuters)

The S&P/TSX Composite Index closed down 100.85 points, or 0.9 per cent, in Toronto on Monday, at 11,607.0.

"This government debt overhang — all we did was take the massive overhang of private sector debt and transferred it to the public sector," said Paul Taylor, chief investment officer at BMO Harris Private Banking.

"And now we need the public sector to deal with that in the intermediate to longer term to provide assurance to folks that we will have sufficient economic firepower to draw on should we experience another situation that is as dire as we saw 12, 18 months ago."

Beyond a general sense of gloom over belt-tightening to come, commodities dragged the TSX lower.

The August crude contract on the New York Mercantile Exchange declined 61 cents to $78.25 US a barrel. Oil had rallied strongly on Friday on expectations tropical storm Alex could disrupt oil production in the Gulf of Mexico. But by Monday morning, those worries had eased.

Gold also lost some of its recent lustre, with the August contract on the New York Mercantile Exchange dropping $17.60 to $1,238.60 US an ounce. The loonie was relatively unchanged, trading 0.01 of a cent higher at 96.54 cents US.

U.S. exchanges higher

In New York, the Dow Jones Industrial Average slipped 5.29 points, or 0.05 per cent, to 10,138.52. The tech-laden Nasdaq finished at 2,220.65, down 2.83, or 0.1 per cent.

U.S. investors seemed more concerned with waiting for positive data out of their own economy than paying attention to any international accords signed over the weekend.

Investors are hoping for reassurance on the U.S. recovery this coming week from the Institute for Supply Management's latest reading on the manufacturing sector, due Thursday.

On Tuesday, the U.S. Conference Board releases its latest reading on American consumer confidence and on Friday, the Labour Department releases the June non-farm payrolls report.