Stocks have weakened Monday, as investors lock in profits ahead of this week’s decision on U.S. interest rates. At midday, the S&P/TSX composite index is down 69.62 points at 7,001.29.

Uncertainty over whether the U.S. Federal Reserve will opt for a hefty half percentage point cut in interest rates or a tamer quarter-point cut when it meets on Wednesday is keeping investors on edge.

Toronto volume at mid-morning was a sluggish 45.2 million shares , valued at $489.5 million.

Information technology shares fell 1.57% , and industrials fell 1.11%. The materials sector, which features gold, base metals and forestry stocks, is off 1.27%.

EnCana were flat at $51 after Canada’s biggest oil and gas firm confirmed its 2003 sales target and said it expects 2004 per share volume sales growth to reach 10 percent.

Alliance Atlantis Communications slipped 9¢ to $19.15 after reporting a higher fourth-quarter profit as the accounting impact of a stronger Canadian dollar offset weaker sales and a one-time charge at the film and television firm.

In economic news, Statistics Canada reported a 0.9% drop in April retail sales, the second consecutive drop in sales. Consumer spending in retail stores came in at $26.1 billion in April, virtually the same level as in January. Ontario was the leading provincial decliner with sales down 2.6%, partly because of the SARS outbreak in the Toronto area.

In New York, stocks have fallen as investors brace for the Federal Reserve’s decision on interest rates later this week.

The Dow Jones industrial average is off 137.26 points to 9,063.49. The S&P 500 is down 14.18 points at 981.51. The Nasdaq composite index has fallen 32.27 points 1,612.45.

Markets were also depressed by a profit warning from U.S. hospital operator Tenet Healthcare

The TSX Venture composite index is off 5.27 points to 1,107.34.