The Toronto stock market ended lower on Monday, as problems in the U.S. housing sector overshadowed a big merger in the steel sector.

The S&P/TSX composite index closed down 32.90 points, or 0.24%, at 13,487.43.

The drop followed a U.S. report that showed the number of unsold homes in July was at its highest level in more than 15 years, adding to worries about the impact of the U.S. subprime mortgage crisis.

In M&A news, U.S. Steel Corp. said it will buy Canada’s Stelco for about $1.1 billion, or $38.50 a share. Stelco shares jumped $10.70, or 39.7%, to $37.63.

The TSX energy sector lost 0.62% as the October crude contract on the New York Mercantile Exchange reversed direction to move up 88¢to US$71.97. EnCana was down $1.26 to $61.16.

The metals and mines sector dipped 1.1% as Teck Cominco fell 77¢ to $44.89 and HudBay Minerals dropped 33 to $24.01.

The gold subindex slipped 1.54%. Southwestern Resources shares were down 34¢ or 16.67% to $1.70 after the mining company said resources at its Boka gold project in China were “significantly less” than previously reported because of errors in assay results.

The financials sector was flat. Royal Bank shares lost 53¢ to $54.47 as investors continued to react to the bank’s earnings report that came out on Friday.

The junior S&P/TSX Venture composite index fell 6.80 points, or 0.26%, to 2,632.68.

The Canadian dollar moved down 0.21 cent to US94.85¢.

In New York, U.S. stocks fell on Monday following the release of the July housing report.

The Dow Jones industrial average was down 56.74 points, or 0.42%, at 13,322.13. The S&P 500 was down 12.58 points, or 0.85%, at 1,466.79. The Nasdaq composite index was down 15.44 points, or 0.60%, at 2,561.25.