Bloomberg News

Canadian Stocks Fall After China Cuts Economic Growth Target

March 05, 2012

Canadian stocks fell for a second day, led by raw-materials and energy producers, after China cut its economic growth target and a purchasing managers’ survey showed a decline in euro-region services and factory output.

First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, lost 5.4 percent as the metal retreated for a second day. Silver Wheaton Corp. (SLW), the country’s third-biggest precious-metals company by market value, decreased 3.1 percent after an analyst at Macquarie Group Ltd. reduced his rating on the shares. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, slipped 1.8 percent as natural gas futures dropped on the New York Mercantile Exchange.

The S&P/TSX Composite Index (SPTSX) declined 119.87 points, or 1 percent, to 12,523.95 at 4 p.m. in Toronto.

“It’s an open question how much China is going to grow for three or four years,” Todd Johnson, a money manager at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees C$340 million ($342 million). “It’s important to the commodity sector because they’re the net price-setter on lots of materials: copper, iron ore, even oil.”

The S&P/TSX lost 0.6 percent last week as oil dropped the most since Jan. 13 on easing Middle East tensions and gold slumped the most since Dec. 16 on a stronger U.S. dollar. Energy and raw-materials companies make up 48 percent of Canadian stocks by market value, according to Bloomberg data.

China reduced its annual growth target to 7.5 percent from 8 percent. The country needs to shift to a more sustainable and efficient economic model, Premier Wen Jiabao told the National People’s Congress today.

European Surveys

A composite index of euro-area services and manufacturing purchasing managers’ surveys dropped to 49.3 last month from 50.4 in January, London-based Markit Economics said today. The firm published an initial figure of 49.7 on Feb. 22. Readings below 50 indicate contraction.

Base-metals and coal producers in the S&P/TSX fell the most since Dec. 13. First Quantum dropped 5.4 percent to C$21.95. Teck Resources Ltd. (TCK/B), Canada’s largest base-metals and coal producer, sank 6 percent to C$36.20. Inmet Mining Corp. (IMN), a copper and zinc producer, slumped 8.1 percent to C$60.

Among gold producers, Goldcorp Inc. (G), the world’s second- biggest by market value, lost 1.9 percent to C$47.65 as the precious metal retreated. Barrick Gold Corp. (ABX), the world’s largest company in the industry, decreased 1.1 percent to C$46.38. Semafo Inc. (SMF), which mines in West Africa, fell 5.1 percent to C$6.21.

Analyst Downgrade

Silver Wheaton fell 3.1 percent to C$36 after Tony Lesiak, an analyst at Macquarie, cut his rating on the shares to neutral from outperform. A neutral rating means the shares will return within 5 percentage points of their benchmark over the next 12 months.

Primero Mining Corp. (P) may reduce its reserves estimate for its San Dimas gold and silver mine in Mexico, Lesiak wrote in a note to clients. Silver Wheaton has agreed to buy the silver produced at the mine. Primero slipped 1.4 percent to C$2.76.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, declined 3.1 percent to C$44.72 after P.J. Juvekar, an analyst at Citigroup Inc., said Citigroup’s checks of fertilizer dealers found “significant dealer caution regarding demand post the planting season.” Juvekar made the comment in a note to clients about CF Industries Holdings Inc.

Mild Weather

Energy companies in the S&P/TSX retreated as natural gas futures dropped to a six-week low on forecasts for mild weather in the U.S. Suncor lost 1.8 percent to C$34.81. Canadian Natural Resources Ltd. (CNQ), the country’s second-biggest energy company by market value, slipped 2 percent to C$35.61. Progress Energy Resources Corp. (PRQ), a western Canadian natural gas producer, tumbled 5.7 percent to C$10.85.

Cancer-drug developer Aeterna Zentaris Inc. (AEZ) soared 23 percent, the most intraday since September 2009, to C$2.13. Investors may be speculating the company will soon release successful results from the third phase of the trial of Perifosine, Reni Benjamin, an analyst at Rodman & Renshaw LLC, said in a telephone interview.

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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