Bloomberg News

Canada Stocks Fall as Europe Funding Concern Drives Down Metals

December 15, 2011

Dec. 14 (Bloomberg) -- Canadian stocks fell for a third day, led by producers of raw materials and energy, as increased funding stress in Europe fueled concern the region’s debt crisis will sap global growth.

Barrick Gold Corp., the world’s largest gold producer, lost 3.8 percent as the metal declined for a third-straight session. Suncor Energy Inc., the country’s biggest energy company, decreased 3.2 percent as crude oil and natural gas retreated. Royal Bank of Canada, the country’s largest lender by assets, slipped 0.8 percent as financial stocks fell.

The Standard & Poor’s/TSX Composite Index dropped 216.89 points, or 1.8 percent, to 11,543.05, the lowest close since Nov. 23. The cost for European banks to borrow in dollars rose for a fifth day, reaching the highest level in two weeks, according to money-market indicators.

“Europe is still a big part of global” gross domestic product, Bruce Cooper, head of equities at TD Asset Management, said in a telephone interview. The unit of Toronto-Dominion Bank oversees about C$190 billion ($182 billion). “Uncertainty will lead to lower growth. Ultimately, this could translate to lower demand for” commodities, he said.

The stock index has decreased 9.6 percent since Aug. 31 as the Thomson Reuters/Jefferies CRB commodity index has sunk 14 percent. The U.S. dollar has advanced and most commodities in the CRB index have declined as the European debt crisis weakens the euro. Energy and raw-materials companies make up 47 percent of Canadian stocks by market value, according to data compiled by Bloomberg.

Industrial Production

The euro slipped below $1.30 for the first time since Jan. 12 after the European Union’s statistics office said industrial production in the euro region fell 0.1 percent in October from the previous month. Economists had forecast no change, according to the median estimate in a Bloomberg survey. The Munich-based Ifo institute cut its 2012 growth forecast for the German economy, Europe’s largest, to 0.4 percent from 2.3 percent.

The S&P/TSX Materials Index slumped to the lowest level since August 2010 as gold dropped the most since September.

Barrick declined 3.8 percent to C$46.47, a fifth-straight retreat. Osisko Mining Corp., which operates in Quebec, plunged 10 percent, the most since February 2009, to C$9.35. Silver Wheaton Corp., Canada’s fifth-largest precious-metals company by market value, lost 5.4 percent to C$30.23 as silver futures sank 7.4 percent.

Crude Falls

Energy stocks fell after the Organization of Petroleum Exporting Countries agreed to raise its production ceiling and the U.S. reported a smaller decrease in crude oil inventories than most analysts in a Bloomberg survey had forecast. Crude futures decreased the most since September and natural gas dropped to the lowest since September 2009.

Suncor declined 3.2 percent to C$28.13. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, lost 4.6 percent to C$35.02. Tourmaline Oil Corp., a western Canadian natural gas and oil producer, tumbled 5.1 percent to C$27.05.

Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, lost 3.5 percent to C$40.27, the lowest since August 2010, after Agrium Inc. said it will raise its potash-mining capacity 50 percent through an expansion of its Vanscoy project. UBS AG cut its price forecasts for the crop nutrient today, citing capacity expansions in a note to clients.

Karnalyte Resources Inc., which is developing a potash project in Saskatchewan, sank 22 percent, the most since it began trading in December 2010, to C$9.80 after canceling a share offering. The company said it couldn’t address regulators’ comments about a resource estimate in time to file a final short-form prospectus.

The S&P/TSX Commercial Banks Index retreated for a third day. Royal Bank fell 0.8 percent to C$48.19. Toronto-Dominion Bank, Canada’s second -largest lender by assets, slipped 0.9 percent to C$72.40. Great-West Lifeco Inc., the country’s second-biggest insurer, dropped 2.8 percent to C$19.17.

--Editors: Nick Baker, Stephen Kleege

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net

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


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