CANADA STOCKS-TSX just off record high, Valeant rises

(Adds fund manager comment, updates prices to close)
    By Alastair Sharp
    TORONTO, July 21 (Reuters) - Canada's main stock index took
a step back from last week's all-time high on Monday, as a 3
percent jump in Valeant Pharmaceuticals International Inc
 was more than offset by declines across most major
    A ratcheting-up of fighting in Ukraine and the Israel-Gaza
conflict gave investors pause, with energy and mining stocks
among the heaviest weights. 
    But that overall caution - eight out of 10 main sectors
ended in the red - was counterbalanced by Valeant, which gained
amid an acrimonious battle for control of Botox maker Allergan.
    Valeant's acquisition target said it would cut jobs in order
to remain independent. Valeant complained that
Allergan has made false statements as the two companies bicker. 
    Uranium miner Cameco Corp also moved sharply
higher, up 4.2 percent to C$22.82. It had fallen last week on
word that output at one of its mines would be delayed.
    But more broadly, investors wonder whether optimism about a
faltering economic recovery is reflective of reality or if the
good vibes could survive an external shock.
    "Markets are pretty complacent and have been riding an
upward momentum trade," said Youssef Zohny, portfolio manager at
Stenner Investment Partners of Richardson GMP in Vancouver.
    "Risk sometimes happens quickly and gets priced into the
market, and we haven't seen that in a while," he said. 
    The Toronto Stock Exchange's S&P/TSX composite index
 ended the session down 16.58 points, or 0.11 percent,
at 15,249.99. The index hit 15,291.15 on Friday, its highest
ever level.
    While the index held close to that record, investors weren't
rushing out their buy orders amid several major geopolitical
    A train carrying the remains of most of the almost 300
victims of the Malaysia Airlines plane downed over Ukraine left
the site on Monday as fighting flared in Donetsk, some 60 km (40
miles) away. [ID:nL6N0PW4ZE}
    Meanwhile, Israeli jets, tanks and artillery pounded Gaza
and Palestinian militants fired rockets at Israel as the U.N.
Security Council's calls for a truce were ignored.
    "Certainly the headline risks emanating from the
geopolitical turmoil right now is dampening a little bit of
investor enthusiasm," said Craig Fehr, Canadian market
strategist at Edward Jones in St. Louis, Missouri.
    However, Fehr said he did not expect the hostilities to dent
the global growth outlook, and that the Toronto index should
rise further in a week light on economic data, especially if
bellwether North American stocks report positive earnings.  
    That outlook was not shared by Stenner's Zohny, who said
there is a high probability of a move lower soon.
    "The markets have been pretty buoyant up here at record
highs, and it wouldn't surprise us to see some sort of drawdown
over the summer," he said.
    Cenovus Energy Inc slipped 1 percent to C$33.05,
while Potash Corp was also down 1 percent, at C$38.35. 
  ($1=$1.07 Canadian)

 (Reporting by Alastair Sharp; Editing by Peter Galloway and
James Dalgleish)