TORONTO - The Toronto stock market closed lower Monday as energy stocks again sold off amid another plunge in oil prices and gold stocks fell sharply as bullion lost ground ahead of this week's interest rate meeting of the U.S. Federal Reserve.

The S&P/TSX composite index was down 25.91 points to 13,705.14.

Falling commodities and a strengthening U.S. currency pushed the Canadian dollar to a fresh 5 1/2 year low, down 0.63 of a cent to 85.79 cents US.

U.S. indexes also moved into the negative column with the Dow Jones industrials down 99.99 points to 17,180.84. The Nasdaq was 48.44 points lower at 4,605.16 and the S&P 500 index was off 12.7 points at 1,989.63.

Energy companies have been the most visible targets of an equity market sell-off that gained momentum in late November after the OPEC cartel rejected calls to cut production in order to support prices that have dropped more than 40 per cent since midsummer amid a huge supply and demand imbalance.

And there was pessimism this situation will change any time soon after Bloomberg quoted the oil minister of the United Arab Emirates as saying OPEC would stand by its decision to maintain production levels even if oil falls as low as US$40 a barrel and would wait at least three months before considering an emergency meeting.

The energy sector, which had been up 20 per cent year to date in midsummer, is now down 30 per cent.

Other sectors have also been hard hit as investors try to gauge the effect of sharply lower oil prices on the Canadian economy.

But the news hasn't been all bad. The consumer staples sector, for example, is up 35 per cent this year, partly because cheaper gasoline prices are leaving people with more discretionary income. And the consumer discretionary group, which includes auto parts manufacturers, has benefited from a falling Canadian dollar and is ahead 20 per cent.

"The consumer segments are going to be obvious beneficiaries over time from the boost the consumer wallet gets from this," said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

"There will be other sectors that perhaps will benefit when you think about input costs, the industrials to a degree (such as airlines). All will benefit from lower energy costs as it relates to their bottom lines."

Meanwhile, early price support for crude also faded, with the January crude down $1.90 to US$55.91 a barrel after falling 12 per cent last week alone and the energy sector was off 1.5 per cent.

Talisman Energy (TSX:TLM) was a major advancer with its stock ahead 93 cents or 18.45 per cent to $5.97 amid confirmation Monday that it is engaged in discussions with Spanish oil major Repsol regarding a potential transaction. Repsol said separately that its board will discuss a potential bid for 100 per cent of Talisman.

Commodities were also pressured by a U.S. dollar which strengthened ahead of the Federal Reserve's interest rate announcement on Wednesday. Rates are expected to start rising sometime in 2015 but the timing is unclear. The Fed has committed to keeping short term rates ultra-low "for a considerable period of time" for several years and markets will look to see if there is any change in that wording.

The gold sector fell 6.8 per cent with February bullion down $14.80 to US$1,207.70 an ounce.

March copper fell six cents to US$2.88 a pound and the base metals component declined 1.4 per cent.

Non-resource sectors provided some buoyancy to the TSX with consumer staples up 1.35 per cent, while the consumer discretionary group climbed 1.17 per cent and industrials rose 0.7 per cent.

News from © The Canadian Press, 2014