Bloomberg News

Canadian Mining Companies Decline on Demand Concerns

April 16, 2012

Canadian stocks fell as declines in mining and metal shares outweighed an advance in financial shares after a stronger-than-forecast increase in U.S. retail sales.

First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, fell 3.4 percent as the metal slipped on concern over the European debt crisis. Suncor Energy Inc., Canada’s largest oil and gas producer, rose 1.2 percent. Toronto-Dominion Bank (TD), the country’s second-largest lender, climbed 0.9 percent. Research In Motion Ltd. (RIM) jumped 3.1 percent, after three people with knowledge of the matter said the BlackBerry maker is in talks to hire an adviser on its strategic options.

The Standard & Poor’s/TSX Composite Index (SPTSX) declined 2.8 points, or less than 0.1 percent, to 12,037.59 in Toronto.

“The initial optimism around retail sales drove futures up,” Brian Huen, a managing partner at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$55 million ($55 million). “Now there’s a bit of a drag on North American markets as a whole as a result of the weakness in the U.S. right now.”

The S&P/TSX had its seventh straight weekly decline for the five days ending April 13, its longest losing streak since 2008, as weaker-than-forecast U.S. jobs numbers and reports of slowing growth in China raised concern that demand may slip for Canadian commodities. The U.S. is the world’s biggest consumer of oil, while China is the number one user of copper.

Mixed Reports

Energy companies increased today as U.S. retail sales gained 0.8 percent in March, almost three times as much as projected, following a 1 percent advance in February, according to Commerce Department figures. The median forecast of 81 economists surveyed by Bloomberg News called for a 0.3 percent rise. A separate report showed manufacturing in the New York region expanded in April at the slowest pace in five months.

Suncor Energy Inc. (SU) rose 1.2 percent to C$30.81. TransCanada Corp. (TRP), the developer of the proposed Keystone XL (TRP:US) pipeline, gained 1.2 percent to C$42.98. Natural gas marketer Keyera Corp. (KEY) decreased 3.6 percent to C$37.60.

Financial shares also advanced on the U.S. retail sales figures. Toronto-Dominion Bank climbed 0.9 percent to C$82.70. Royal Bank of Canada (RY), the country’s biggest lender, increased 0.7 percent to C$56.29.

Metals Retreat

Materials stocks in the S&P/TSX fell, driven by metal producers, as gold and copper prices retreated. Gold futures declined for a second straight session in New York as a stronger dollar curbed demand for the precious metal as an alternative asset.

Ivanhoe Mines Ltd., Rio Tinto Group’s partner in the Oyu Tolgoi Mongolian gold and copper mine, fell 5.7 percent to C$12.03. Detour Gold Corp. (DGC), which is developing a mine in Ontario, declined 1.9 percent to C$24.33.

Copper fell to a three-month low in New York as rising yields on Spanish government bonds stoked concern that the sovereign-debt crisis in Europe may worsen, potentially curbing demand. First Quantum slid 3.4 percent to C$20.88.

RIM rose 3.1 percent to C$13.26, with the entire gain coming in the last minute of trading. Canada’s largest technology company is considering hiring one Canadian bank and one global bank, said one of the people, who asked to remain anonymous because the deliberations are private.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

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


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Companies Mentioned

  • TRP
    (TransCanada Corp)
    • $51.13 USD
    • -0.50
    • -0.98%
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