Bloomberg News

Canadian Stocks Fall as Commodity Shares Drop on Europe Concern

September 28, 2011

Sept. 28 (Bloomberg) -- Canadian stocks fell for the first time in three days as copper and energy companies slipped on a decline in U.S. durable goods orders and concern that Europe’s debt crisis will linger.

Suncor Energy Inc., Canada’s biggest oil and gas producer, slipped 4.7 percent as crude headed for its biggest quarterly drop since 2008. Teck Resources Ltd., Canada’s biggest base- metals and coal producer, sank 5.3 percent as copper lost 2.3 percent. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, slid 4.9 percent as corn and wheat slumped.

The Standard & Poor’s/TSX Composite Index lost 235.22 points, or 2 percent, to 11,585.87.

“There is a wait-and-see mentality,” said Bob Decker, a money manager at Aurion Capital Management in Toronto who oversees about C$5.5 billion ($5.4 billion). “There is still concern about deceleration in the economy and that the commodity shake-ups have not run their course.”

The S&P/TSX had advanced 3.1 percent the past two days as mining and energy companies gained on signs that European policy makers were intensifying efforts to contain the region’s debt crisis.

The European Commission is resisting a push by as many as seven euro-area countries to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit, a European official said today.

Stockpiles Rise

Canadian energy companies dropped after crude oil fell 3.8 percent on the discord among European leaders and a report that U.S. stockpiles increased last week to an eight-week high. Natural gas sank 1.8 percent as drilling in the U.S., the biggest consumer of the nation’s gas output, increased supplies of the fuel and forecasts of moderating weather that may reduce demand.

Suncor Energy erased 4.7 percent to C$27.05. Penn West Petroleum Ltd., a western Canadian energy producer, decreased 3.3 percent to C$16. Encana Corp., the country’s largest natural gas producer, slid 4 percent to C$20.21, its lowest value since February 2005. Petrobank Energy and Resources Ltd., a western Canadian oil and gas producer, lost 12 percent to C$8.25, its lowest price since October 2006.

All 10 of the industry groups in the S&P/TSX fell, led by the S&P/TSX Materials Index, which lost 3.9 percent to erase this week’s gains.

Base metal producers sank as copper declined more than 5 percent amid concern that a slowing global economy will reduce demand for the metal. A report showed orders for U.S. durable goods fell 0.1 percent in August after rising 4.1 percent in July.

Base-Metal Shares

Teck Resources Ltd. slipped 5.3 percent to C$30.40. Mercator Minerals Ltd., which mines copper and molybdenum, dropped 11 percent to C$1.51. Taseko Mines Ltd., which produces copper in British Columbia, declined 6.4 percent to C$2.76, its lowest value since October 2009.

Fertilizer producers sank as corn and wheat futures fell on speculation demand for food and animal feed will drop as the U.S. economy slows and Europe’s debt crisis reduces consumer confidence. Corn fell 1.5 percent after rising 2.2 percent the prior two sessions. Wheat fell 3 percent on signs that slowing economies and ample global supplies are eroding demand.

Potash Corp. dropped 4.9 percent to C$47.05, the lowest since December 2010. Agrium Inc., a fertilizer producer and farm retailer, declined 3.8 percent to C$73.25, its lowest price in more than a year.

--Editors: Stephen Kleege, Joanna Ossinger

To contact the reporter on this story: Kaitlyn Kiernan in New York at kkiernan2@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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