U.S. Markets close in 1 hr 12 mins

CANADA STOCKS-TSX steady; Brookfield Office gain offsets U.S. budget fears

* TSX rises 3.44 points, or 0.03 percent, to 12,847.52

* Seven of the 10 main index sectors decline

* Brookfield Office Properties jumps on takeover deal

* SNC-Lavalin climbs after plan to sell AltaLink stake

* Petrominerales soars 51 percent on Pacific Rubiales bid

By John Tilak

TORONTO, Sept 30 (Reuters) - Canadian stocks were little

changed on Monday as a jump in Brookfield Office Properties

helped offset broad market weakness fueled by worries

about the congressional budget impasse that threatened to

paralyze the U.S. government.

Shares of Brookfield Office Properties jumped 14.1 percent

after parent company Brookfield Property Partners

said it would buy the 49 percent of Brookfield Office that it

did not already own to consolidate their office property


Also dampening investor sentiment was political uncertainty

in Italy, where some senators from Silvio Berlusconi's

center-right party looked ready to form a breakaway group unless

the former premier backed down on his hard line to bring down

Italy's government and head to elections.

As a midnight shutdown deadline approached, Democrats who

control the U.S. Senate appeared confident that they would

defeat Republicans' efforts to delay "Obamacare" health reforms,

which would enable them to send a "clean" funding bill back to

the House of Representatives for a vote.

"It's politics impinging on capital markets, in a negative

way," said David Cockfield, managing director and portfolio

manager at Northland Wealth Management. U.S. politicians are

playing to their home crowds, he added.

The Toronto Stock Exchange's S&P/TSX composite index

was up 3.44 points, or 0.03 percent, at 12,847.52.

In comparison, U.S. stocks were down sharply, and the TSX

looked set to outperform the S&P 500 in the third


The Canadian index will do better than its U.S. counterpart

in the fourth quarter as well, said Cockfield, who expects the

TSX to end the year at 13,500.

Seven of the 10 main sectors on the index were in the red on


Tracking a drop in the price of oil, shares of energy

producers shed 0.8 percent. In the group, Suncor Energy Inc

was down 1.2 percent at C$36.87, and Canadian Natural

Resources Ltd gave back 0.6 percent to C$32.24.

Financials, the index's most heavily weighted sector, added

0.2 percent, with declines in insurance companies offset by

gains made by banks. Manulife Financial Corp fell 0.9

percent to C$17.22, while Royal Bank of Canada advanced

0.2 percent to C$66.66.

Gold-mining stocks eked out a small gain, with Goldcorp Inc

climbing 1.8 percent to C$27.02 and Barrick Gold Corp

adding 0.4 percent to C$19.18.

SNC-Lavalin Group jumped 2.7 percent to C$42.48

after the engineering and construction company said it was

looking to sell an equity stake in AltaLink, Alberta's largest

regulated electricity transmission company.

Shares in Canadian oil company Petrominerales

soared about 51 percent to C$11.71 after a takeover deal by

Pacific Rubiales, Colombia's largest private oil