Bloomberg News

Canadian Stocks Extend Weekly Decline as Materials Fall

May 11, 2012

Canadian stocks fell, completing a second straight weekly decline, as energy and materials producers slipped on concern that a weakening Chinese economy may curb demand for commodities.

Barrick Gold Corp. (ABX) and Suncor Energy Inc. declined 1.9 percent each as oil and gold futures slumped. Osisko Mining Corp. sank 13 percent after RBC Capital Markets cut its rating. Sun Life Financial Inc. (SLF), the country’s third-largest insurer, rose 3.3 percent, as financial shares rose on stronger-than- forecast employment figures. Savanna Energy Services Corp. (SVY) gained 4.1 percent after RBC recommended the shares.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 41.50 points, or 0.4 percent, to 11,694.67 today for a 1.5 percent weekly decline. The index has retreated 8.2 percent since the 2012 high in February.

“It’s a bit of a mixed day, with Chinese industrial production a little lower than last month, showing signs of slowing,” Todd Johnson, a money manager at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees C$349 million ($350 million). The Canadian jobs number “was very good and helps propel the market higher, given domestic jobs here are pretty robust.”

The benchmark gauge fell 3 percent last week as a U.S. industry report showed employers added fewer jobs than forecast in April and commodity prices dropped. Energy and mining shares account for 43 percent of Canadian stocks by market value.

China’s Slump

Chinese industrial production rose the least since 2009 in April, while retail sales and new lending gained less than estimated and inflation was below target, figures showed today. The value of Chinese house sales slumped, adding to signs the world’s second-largest economy is weakening. Oil fell 1 percent, to $96.13 a barrel, the lowest settlement since Dec. 19.

Suncor Energy, Canada’s largest oil and gas producer, lost 1.9 percent to C$28.75.

Materials shares had the biggest decline in the S&P/TSX today, falling 1.5 percent as a group as gold futures plunged to a four-month low, capping the biggest weekly drop since March. Copper also declined. The group had the worst performance of the week, down 5 percent.

Osisko Mining Corp. (OSK) fell 13 percent to C$7.40, the company’s biggest retreat since February 2009, after RBC lowered the stock to sector perform from outperform. The rating means the stock is expected to trade in line with the sector average over 12 months. The company said yesterday it would shut its ore-processing mill at the Canadian Malartic mine for as long as three weeks after a fire.

Barrick, Eldorado

Barrick Gold slipped 1.9 percent to C$37.09, while Eldorado Gold Corp. (ELD) fell 2.9 percent to C$11.49.

Ivanhoe Mines Ltd. dropped 5.1 percent to C$9.48. The Vancouver-based miner appointed David Klingner as chairman and said construction of phase one at its Oyu Tolgoi gold and copper project in Mongolia was 82 percent complete at the end of April.

A report today showed Canadian employment rose almost six times faster than economists forecast in April, led by private- sector and full-time positions. Employment rose by 58,200 following a March jump of 82,300, Statistics Canada said today in Ottawa, for the largest two-month increase in more than 30 years.

An index of banks in the S&P/TSX rose 0.2 percent, after falling as much as 0.7 percent earlier today following JPMorgan Chase & Co. (JPM:US)’s disclosure of a $2 billion trading loss. Toronto- Dominion Bank, Canada’s second-biggest lender, rose 0.4 percent to C$80.51.

A gauge of insurers added 1.2 percent. Sun Life climbed 3.3 percent to C$23.30, while Manulife Financial Corp., Canada’s largest insurer, added 2.4 percent to C$12.36.

Savanna Energy Services gained 4.1 percent to C$7.70 after RBC raised the stock to outperform from sector perform.

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net

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


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