Bloomberg News

Canadian Stocks Snap Four-Day Rally Amid Spain Concern

May 28, 2012

Canadian stocks declined as concern about Spain’s finances overshadowed rallies in gold and oil, preventing the fifth straight advance in the Standard & Poor’s/TSX Composite Index.

Canadian Pacific Railway Ltd. (CP) dropped 2.7 percent after talks to end a six-day strike ended. Canadian National Railway Co. (CNR) dropped 1.9 percent as the work stoppage snarled traffic. Barrick Gold Corp. (ABX) and Goldcorp Inc. (G) fell at least 0.4 percent. Suncor Energy Inc. (SU) gained 0.3 percent as oil futures rose for a third consecutive session.

The S&P/TSX Composite Index (SPTSX) lost 11.98 points, or 0.1 percent, to 11,564.49 at 3:13 p.m. Toronto time. The benchmark gauge rose as much as 0.5 percent earlier. It added 2.6 percent last week and posted the biggest four-day rally since Feb. 22. Trading volume for S&P/TSX companies was 59 percent less than the 10-day average today as U.S. stock exchanges were shut for Memorial Day.

“The lack of liquidity is probably the key thing in Canada today,” 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 ($54 million). “You could see some swings. I don’t expect people to give much legitimacy to big moves in stocks.”

The index completed its first weekly gain since the end of April on May 25 as materials and bank shares rallied after U.S. home sales rose and investors speculated China and Europe will stimulate economic growth.

‘Grave and Significant’

Industrial companies in the benchmark gauge decreased as railroads slumped. The strike is having a “grave and significant” impact on the world’s 10th-biggest economy, Labor Minister Lisa Raitt told reporters in Ottawa after introducing legislation to end the six-day dispute.

Canadian Pacific fell 2.7 percent to C$75.07. Canadian National Railway slipped 1.9 percent to C$81.97.

Barrick Gold, the world’s largest producer of the metal, decreased 0.4 percent to C$41.07. Goldcorp, the second-largest producer of the metal, fell 1.1 percent to C$38.40.

Bank were little changed as Spanish debt fell amid concern the nation’s lenders will need more financial support to weather Europe’s debt crisis. Spanish Prime Minister Mariano Rajoy said the euro region’s rescue fund should be able to bypass national governments and recapitalize distressed lenders directly.

Energy companies in the S&P/TSX rose as oil advanced for a third day on the growing signs that Greek voters may back austerity measures, boosting confidence that the bloc’s debt crisis can be contained.

Suncor Energy, Canada’s largest oil and gas producer, rose 0.3 percent to C$28.95.

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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