A grim economic forecast from the World Bank put pressure on stocks and commodities prices on Monday overshadowing news of possible merger in mining industry.

The World Bank said Monday that the global economy will shrink 2.9% this year. That is worse than the body’s previous forecast for a 1.7% contraction

In today’s M&A news, Anglo-Swiss mining company Xstrata PLC has made a preliminary approach seeking a merger with rival Anglo American PLC

Anglo American confirmed the move made by Xstrata over the weekend.

Bringing the two companies together would create a group worth US$68 billion, based on Friday’s closing share prices.

In other market news, the Ontario Securities Commission is investigating Manulife Financial Corp. over what the insurance giant told investors about the risks of its guaranteed fund business, Manulife said Friday.

In commodities news, oil prices slipped on investor concerns over a weak U.S. economy.

Benchmark crude for July delivery fell 22¢ to US$69.33 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.

The Canadian dollar weakened against the U.S. currency on Monday morning, pressured in part by broad-based strength in the greenback and sagging global equity markets.

The Canadian dollar dropped to US87.40¢, down from US88.10¢ at Friday’s close.

In Asia, markets were generally stronger, with Japan’s Nikkei 225 up 0.4% higher at 9,826.2, Hong Kong Hang Seng up 0.8%.

In Europe, the UK’s FTSE 100 was down 49.51 points, or 1.1%, at 4,296.42.

Germany’s DAX fell 63.67 points, or 1.3%, to 4,775.79 while the CAC-40 in France was 19.51 points, or 0.6%, lower at 3,201.76.

On Friday, materials stocks carried the Toronto Stock Exchange higher, but the benchmark index still finished with a hefty weekly loss thanks to three days of steep declines.

A late-day surge sent the S&P/TSX composite index up 166.45 points, or 1.6%, to 10,287.95. For the week, the index dropped 3.6%.

Junior stocks also advanced Friday, sending the S&P/TSX Venture composite index up 4.49 points, or 0.4%, to 1,118.80.

The main stock market indices in New York were little changed on Friday, but also finished the week with losses.

The Dow Jones industrial average closed at 8,539.73, down 15.87 points, or 0.2%. The blue-chip average finished the week down 3%.

The S&P 500 index edged up 2.86 points, or 0.3%, to 921.23, but closed down 2.6% for the week.

The Nasdaq composite index advanced 19.75 points, or 1.1%, to 1,827.47. It was off 1.7% for the week.

IE