The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed down 89.41 points, or 0.58 percent, at 15,383.80. Seven of its 10 main sectors fell.
Investor enthusiasm for equity markets has been dampened by stretched valuations, said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates.
"The assumptions have been that politics and interest rates wouldn't matter that much ... I think some of those assessments are coming out of the market."
The Federal Reserve is expected on Wednesday to raise interest rates for the third time since December, while comments by a senior Bank of Canada official raised the prospect that the central bank could hike rates sooner than investors had anticipated.
The tech sector <.SPTTTK> lost 2 percent as CGI Group (>> CGI Group Inc) lost 1.5 percent to C$66.15 and BlackBerry Ltd (>> BlackBerry Ltd) tumbled nearly 5 percent to C$14.11.
The financials group, which accounts for one third of the TSX's weight, declined 0.7 percent. Royal Bank of Canada (>> Royal Bank of Canada) fell 1.1 percent to C$94.26.
The energy sector <.SPTTEN> was little changed as oil prices broke a three-day losing streak despite rising U.S. drilling. [O/R]
U.S. crude oil futures settled 25 cents higher at $46.08 a barrel.
Cenovus Energy <CVE.TO advanced 2.4 percent to C$11.37 but Enbridge Inc (>> Enbridge Inc) fell 2.2 percent to C$51.00.
The materials group, which includes precious and base metals miners and fertilizer companies, fell 0.8 percent.
Potash Corporation of Saskatchewan Inc (>> Potash Corporation of Saskatchewan Inc) dropped 1.7 percent to C$22.51, while gold <XAU=> was little changed at $1,265.20 an ounce ahead of the Fed meeting this week.
Shares of aircraft manufacturer Bombardier (>> Bombardier, Inc.) rose nearly 3 percent to C$2.44, recovering from a decline on Friday, when the U.S. International Trade Commission gave a green light to the U.S. Commerce Department to begin preparing anti-dumping and anti-subsidy duties against Bombardier's new jets.
(Additional reporting by Leah Schnurr; Editing by W Simon and Grant McCool)
By Fergal Smith
Stocks treated in this article : Barrick Gold Corp
, Bombardier, Inc.
, Encana Corp
, Eldorado Gold Corp
, Enbridge Inc
, CGI Group Inc
, Potash Corporation of Saskatchewan Inc
, BlackBerry Ltd
, Royal Bank of Canada
, Cenovus Energy Inc