Bloomberg News

Canadian Stocks Fall for Fourth Day on Global Growth Concern

December 15, 2011

Dec. 15 (Bloomberg) -- Canadian stocks fell for a fourth day as mining and industrial stocks dropped amid concern slowing growth in China and a prolonged European debt crisis will hinder a global economic recovery.

Barrick Gold Corp., the world’s largest gold producer, dropped 1.5 percent as the metal declined after settling at the lowest price since July yesterday. Canadian National Railway Co. decreased 1.6 percent as a report showed manufacturing in China may contract for a second month and International Monetary Fund Managing Director Christine Lagarde said Europe’s debt crisis is escalating.

The Standard & Poor’s/TSX Composite Index retreated 38.63 points, or 0.3 percent, to 11,504.42. The benchmark gauge has dropped 4.4 percent since Dec. 9, poised for its worst week since September.

“Clearly what’s happening is you’ve got this macro problem,” Irwin Michael, a money manager at ABC Funds in Toronto, said in a telephone interview. His firm oversees C$1 billion ($967 million). “It appears like the sky is falling. It’s scaring off a lot of investors -- why do anything just before you take your Christmas holiday?”

The S&P/TSX fell this week after Moody’s Investors Service said it will review European Union countries’ ratings and the U.S. Federal Reserve declined to begin a third round of asset purchases to spur economic growth. The index has plunged 14 percent this year, which would be its second-biggest annual retreat in the last 20 years behind that of 2008.

Slowdown in China

Manufacturing in China probably contracted this month, according to a survey by HSBC Holdings Plc and Markit Economics. The country’s foreign direct investment fell last month for the first time since 2009, the Ministry of Commerce said.

U.S. industrial production slipped 0.2 percent last month, the Federal Reserve said today in Washington. Most economists in a Bloomberg survey had forecast an increase.

Lagarde, speaking at the State Department in Washington, said the European debt crisis is growing to the point that it won’t be solved by one group of countries. If countries don’t work together, the world will face a situation similar to the 1930s, before the world slid into World War II, she said.

The S&P/TSX Materials Index dropped, led by gold producers, after closing at the lowest since August 2010 yesterday. Barrick slipped 1.5 percent to C$45.79, a sixth-straight retreat. Agnico-Eagle Mines Ltd., Canada’s sixth-biggest gold producer by market value, declined 5.6 percent to C$37.92, the lowest since December 2008. Nevsun Resources Ltd., which mines precious and base metals in Eritrea, sank 13 percent to C$5.10.

Added to Index

First Majestic Silver Corp., which operates in Mexico, jumped 9.3 percent to C$16.60. The company will be added to the NYSE Arca Gold Miners Index on Dec. 19, Todd Anthony, investor- relations manager for First Majestic, said in a telephone interview. The index is used for the $8.56 billion Market Vectors Gold Miners ETF.

Base-metals producers retreated as copper slumped to a seven-week low. Teck Resources Ltd., Canada’s biggest industrial-metals and coal producer, lost 1.9 percent to C$34.43. First Quantum Minerals Ltd., the country’s second- largest publicly traded copper producer, decreased 2 percent to C$18.18.

Suncor Energy Inc., Canada’s largest oil and gas producer, fell 1.9 percent to C$27.59 as crude oil dropped to the lowest in six weeks.

Commodity Market

“The one thing that tends to move the Canadian market more is the price of commodities,” Timothy Lazaris, chief executive officer of Red Sky Capital Management Ltd. in Toronto, which oversees C$54 million, said in a telephone interview. “There’s been some weak data in China” where demand is especially important to Canada because “we sell a lot of base metals and a lot of material into the global commodity cycle.”

Industrial companies in the S&P/TSX retreated, led by railroads. CN, Canada’s biggest railroad, fell 1.6 percent to C$75 to extend its four-day drop to 5 percent. Canadian Pacific Railway Ltd. declined 2.5 percent to C$63.86, ending a six-day streak of gains.

Finning International Inc., the world’s largest Caterpillar dealer, tumbled 5.5 percent to C$22.05 after forecasting a 5 percent increase in sales next year. Analysts, on average, estimated C$6.11 billion, a 10 percent gain from C$5.55 billion this year, according to a Bloomberg survey.

Canaccord Financial Inc., Canada’s largest non-bank brokerage, fell 8.2 percent to C$7.80 after agreeing to buy London-based Collins Stewart Hawkpoint Plc for 253.3 million pounds ($393 million). Canaccord’s closing price was the lowest since July 2009.

--With assistance from Ksenia Galouchko in New York. Editors: Stephen Kleege, Jeff Sutherland

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net; 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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