Stocks closed lower Monday as investors were spooked by a U.N. resolution by the United States and the United Kingdom that could push war with Iraq closer to reality.

The measure sets the stage for war in Iraq by declaring Baghdad in violation of U.N. demands to disarm peacefully.

The S&P/TSX composite index fell 56.33 points to 6,502.30, although surging oil prices boosted energy stocks by 2.2%.

Petro-Canada rose $1.39 to $53.55. EnCana gained $1.28 to $49.47, while Hurricane Hydrocarbons added $1.30 to $18.65.

Natural gas futures soared to 2-year highs Monday as cold weather kept much of Canada and the U.S. in its grip and gas supplies remained tight.

TSX tech stocks took the biggest percentage loss, sliding 3.6%. Nortel Networks shares fell 26¢ to $3.03, while Celestica shares dropped 87¢, to $17.25.

Investors didn’t seek protection in gold stocks which slipped 1.25% Monday despite an increase in the price of gold. Placer Dome fell 22¢to $14.68, while Barrick Gold managed gained 3¢ to $23.92.

Toronto volume was 171.1 million shares worth $2.11 billion. Declines beat advances 627 to 482, with 166 unchanged.

The junior TSX Venture Exchange gained 8.28 points to 1,108.81.

In New York, the Dow Jones industrial average fell 159.87 points to close at 7,858.24. The broader S&P 500 Index lost 15.59 points to 832.58. The tech-heavy Nasdaq composite index shed 26.65 points to 1,322.37.

The Canadian dollar finishedat its highest level in more than two years on Monday, breaking through the US67¢ level. The loonie closed at US67.03¢, up substantially from US66.45¢, at Friday’s close.