Toronto stocks reversed course Monday afternoon to close flat, while U.S. markets rallied as oil prices fell sharply. November crude futures plunged US$1.26 a barrel to US$53.67 in New York on indications of declining demand.

The S&P/TSX composite index closed down 0.03 of a point at 8,788.90 on volume of 237 million shares, with six of the 10 TSX sub-groups closing higher. At midday the TSX was up 63 points.

Surging tech stocks led the winners — up 2.93% — with Nortel Networks Corp. up 4.08% on trading of almost eight million shares. Telecom stocks rose 1.24%.

The heavily weighted financial group was ahead 0.08% as insurance companies advanced after the new chairman of the House of Commons finance committee said on Friday that mergers between Canada’s biggest banks and top insurers are “going to happen” if the financial sector requests it.

Shares of Manulife Financial rose 80¢ or 1.45% to $55.80, while Great-West Life climbed 20¢ or 0.80% to $25.15.

Bank stocks slipped ahead of tomorrow’s decision on interest rates. The Bank of Canada is widely expected to raise interest rates by 25 basis points.

Bank of Nova Scotia gave up 20¢ to $39.10, and Bank of Montreal fell 35¢ to $58.75.

Energy stocks slipped 1% as oil prices dropped. Slumping gold stocks – down 1.07% — weighed on the materials group, which edged down 0.59%

Shares of Iamgold were down 87¢ or 8.74% at $9.08 after its proposed merger with Gold Fields Ltd. was thrown into doubt Monday as South Africa’s Harmony Gold Mining Company Ltd. made a bid for Gold Fields. Harmony’s US$8.1-million US deal would create the world’s largest gold miner by ounces produced and is contingent on Gold Fields shareholders nixing the Iamgold deal.

The junior S&P/TSX Venture composite index slipped 4.61 to 1,658.11.

In New York, the sharp drop in oil prices gave Wall Street a modest relief rally. The Dow Jones industrial average rose 22.94 or 0.23% to 9,945.32.

The tech-heavy Nasdaq composite index jumped 25.02 or 1.31% to 1,936.52. Tech stocks rose as investors waxed optimistic on earnings from International Business Machines Corp., which reported earnings after the session. IBM, which beat Wall Street estimates by US3¢ per share before a one-time charge, closed at US$85.82, up US$1.07.

The broader S&P 500 index was up 5.82 or 0.53% at 1,114.02.

In other earnings news, although 3M saw its earnings climb 17% in the third quarter, the industrial conglomerate missed Wall Street forecasts by a penny. Investors were further concerned as the company warned that its full-year results might also miss estimates. 3M tumbled US$1.88 to US$76.10.