TORONTO - A selloff in commodity stocks sent the Toronto stock market tumbling Monday as pessimism deepened about a convincing economic recovery being in place by the end of the year.

The S&P/TSX composite closed down 255.67 points or 2.5 per cent at 10,027.43 after tumbling as much as 356 points, extending losses triggered at the end of last week by a much worse than expected U.S. employment report.

The energy sector was a leading loser, down 3.8 per cent, as the August crude contract on the New York Mercantile Exchange lost $2.68 to US$64.05.

It was the fourth straight day of lower crude prices and since the beginning of the month. Crude prices have fallen about eight per cent on the growing belief that the economy won't be strong enough to lift demand as much as expected.

Sector heavyweight EnCana Corp. (TSX:ECA) lost $2.30 to $53.05 while Suncor Inc. (TSX:SU) gave back $2 to $30.85.

"I'm just taking this as part of the correction or moves we were bound to see in a market that was steadily progressing upwards," said Michael Smedley, portfolio manager at Morgan Meighen and Associates.

"In the Canadian context, of course, it is a particularly resources and particularly mining-focused uptrend we have been in."

The Canadian dollar closed ahead 0.19 of a cent to 86.27 cents U.S.

The dismal performance on the TSX comes after the main index sustained a one per cent decline last week. Indexes had been stalled for much of the past month as momentum behind the spring rally, which at one point sent the TSX up about 40 per cent from March lows, started to fade.

Canada's own unemployment numbers are to be released Friday. They are expected to show job losses of around 30,000 last month.

The TSX Venture Exchange moved 28.33 points lower to 1,064.63.

New York markets closed off early lows as a trade group's measure of the health of the U.S. services sector contracted less than expected in June.

The Dow Jones industrial average rose 44.13 points to 8,324.87 on top of a two per cent slide last week.

The Nasdaq composite index stepped back 9.12 points to 1,787.4 while the S&P 500 index was ahead 2.3 points to 898.72.

The Institute for Supply Management's services index read 47 in June, up from 44 in May. Economists polled by Thomson Reuters had expected a reading of 45.5 last month.

It was the best showing since September when the index was at 50, the sawoff point between growth and contraction.

But the better-than-expected report wasn't enough to assuage the growing doubts about the economy following the disappointing employment numbers and a weak consumer confidence reading.

"There is a sense that the fundamentals in the marketplace haven't caught up with the technical rally that we got in March," said Dan Deming, a trader with Strutland Equities in Chicago.

Uncertainty about company profits in the second quarter and forecasts for rest of the year, to be released in the coming weeks, also have many investors on edge. Dow component Alcoa Inc. opens earnings season on Wednesday.

Elsewhere on the TSX, the base metals sector gave up per cent as the price of paladium and platinum fell almost four per cent while copper stepped back about three per cent.

Equinox Minerals (TSX:EQN) plunged 34 cents or 13.2 per cent to $2.24.

Teck Resources Ltd. (TSX:TCK.B) was down 42 cents to $19.57 after it said it will save about $70 million after securing shipping deals with Canada's largest railways, the latest in a series of recent moves the cash-strapped miner has made to cut costs and reduce debt.

Teck struck agreements with Canadian Pacific Railway Ltd (TSX:CP) and Canadian National Railway (TSX:CNR) to transport coal from its mines in southern British Columbia to ports in the Vancouver area.

Canadian Pacific shares were down $2.17 at $43.08, while Canadian National shares fell five cents to $48.15.

The August bullion contract in New York moved down $6.70 to US$924.30 an ounce, taking the gold sector down four per cent. Barrick Gold Corp. (TSX:ABX) fell $1.42 to $38.29.

Non-commodity sectors also suffered with the financial group down 1.5 per cent. Scotiabank (TSX:BNS) declined 70 cents to $42.70.

In other corporate news, WestJet shares were down 46 cents to $10.34 as the carrier reported that its passenger traffic in June fell by 7.1 per cent from the year-earlier period. The load factor was 72.9 per cent -- down from 76.5 per cent in June 2008.

Pet supply retailer Pet Valu Inc. (TSX:PVC) is to be acquired by Atlanta-based private equity firm Roark Capital Group for $143.7 million. The board has recommended acceptance of the deal. Its shares ran ahead 45 cents to $13.50.