A mixed trading session has the S&P/TSX composite index nearly flat at midday. The TSX benchmark is off three points to 7,430.

Volume is on the light side at 116.8 million shares, with the buying edging selling 27:26. Market breadth is negative however, with losers outnumbering winners 28:23.

The financials are the day’s big weak spot, down about 0.9%, on news of Manulife Financial’s acquisition of Boston’s John Hancock Financial Services.

On Sunday, Manulife said it is buying John Hancock for about $13.5 billion — the biggest cross-border acquisition ever — to create the second-biggest North American insurer.

Investors are playing cautious on the deal, shaving 4% off Manulife stock in heavy trading of 9.7 million shares. It is not uncommon for the buyer to see its price drop in deals such as this, and some analysts have expressed concern about the immediate effect of the deal on its return on equity.

The action in Manulife is also spilling over to the other big financials. Sun Life is down almost 2%.

Bank shares are lower too, led by small slides in Royal Bank and Scotia and Bank of Montreal. TD Ban is bucking the trend, with a small gain.

Elsewhere in the financial group, Kingsway Financial has plunged almost 16% on Friday’s news that it is taking a $20 million charge against third quarter earnings and another $20 million charge against its six-month results, after reviewing unpaid claims. It is also scrapping a planned acquisition, and delaying a proposed offering of trust preferred securities.

There is also some selling in telecom issues, and modest weakness in a selection of other sectors.

Joining Manulife in the headlines is Air Canada, which has dropped 5.4% on news that several of its unions have walked away from its restructuring talks after the airline proposed changes to its pension plans.

Alcan is down a little, dropping 0.4% on news that the European Commission has approved its proposed purchase of Pechiney SA, after it agreed to sell some assets.

Other losers include BCE, EnCana, Ivanhoe Mines and Canico Resources.

The biotechs are slumping again too, with VSM MedTech, Angiotech, QLT and Aeterna Labs all sliding.

However, Procyon Biopharma, Biovail and Cardiome are up in active trading.

It’s much the same story in the tech sector, where Nortel has gained almost 4%, Zarlink Semi and Systems Xcellence are up too. ATI is a big winner, too, gaining 3.3% after an analyst said it should be able to win market share from rivals..

There is some strength back in golds, with Barrick 1.2% higher at midday. There are also gains in Metallic Ventures Gold, Iamgold, and Meridian Gold. Cequel Energy is up, too.

In other M&A news, Trizec Canada is selling two office buildings for $101 million.

Enbridge is buying an additional 15% interest in the Vector pipeline from Duke Energy for US$72.5 million, including assumed debt of approximately US$45.6 million. Upon closing, Enbridge will own 60% of the Vector pipeline.

And, Magellan Aerospace is buying substantially all of the aerospace business and assets of Mayflower Aerospace for $13.4 million. Magellan is proposing a private placement of up to 10 million common shares at $2.25 per share to fund the deal.

Fortis has entered into an underwriting agreement with a syndicate of underwriters led by Scotia Capital Inc. for $350,205,000 offering.

Mosaic Group announced that its entire board and general counsel have resigned.

In New York, stocks trundled along unchanged for much of the morning, but began rallying into the noon hour. The Dow Jones industrial average is up 47 points to 9,360. The Nasdaq composite index has added 11 points to 1,803. The S&P 500 is up seven points to 1,004.