Bloomberg News

Canada Stocks Decline on Building Permits as Gold Rises

November 05, 2012

Canadian stocks fell for a second day as building permits slid more than forecast in non-residential projects and investors awaited the U.S. presidential election.

Turquoise Hill Resources Ltd. (TRQ) jumped 10 percent after announcing its Oyu Tolgoi copper-gold mine in Mongolia has signed a contract with a state-owned firm to supply power to the site. Silver Wheaton Corp. (SLW), which pays miners upfront for a discount on future production, retreated 1.4 percent after missing earnings estimates and cutting its dividend.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 27.63 points, or 0.2 percent, to 12,352.78 in Toronto, erasing earlier gains of as much as 0.3 percent. The benchmark Canadian equity gauge is up 3.3 percent this year. Trading of S&P/TSX companies was almost 2 percent less than the 30-day average.

“It’s the election -- we’ll see relatively light volumes today and tomorrow,” said David Baskin, president of Baskin Financial Services in Toronto. His firm manages about C$450 million ($451.4 million). “I don’t know whether people will take money off the table and see what happens but that’s probably the story and I don’t expect markets to be much changed by the end of the day.”

Banks contributed most to losses on the Toronto Stock Exchange as seven of 10 industries retreated.

U.S. voters head for the polls tomorrow, with a choice between incumbent Democratic President Barack Obama and the Republican challenger Mitt Romney.

Building Permits

The value of Canadian municipal permits fell 13.2 percent to C$6.48 billion ($6.50 billion) from a record high the prior month, Statistics Canada said today in Ottawa. Economists forecast a 3 percent decline according to the median of six responses to a Bloomberg survey.

Bank of Canada Governor Mark Carney has kept the overnight interest rate at 1 percent since September 2010 to encourage borrowing and spending, and has said business investment and consumption will help lead an economic expansion through next year.

Turquoise Hill, which is majority-owned by Rio Tinto Plc (RIO), soared 10 percent to C$8.95, its biggest percentage gain since April. The Oyu Tolgoi mine in Mongolia, of which Turquoise Hill owns 66 percent, has signed a power purchase agreement with the Inner Mongolia Power Corp. for electrical power.

Gabriel Resources Ltd. (GBU) advanced 4 percent to C$2.60 and Agnico-Eagle Mines Ltd. (AEM) gained 2.4 percent to C$53.92 as gold for December delivery rose 0.5 percent to settle at $1,683.20 an ounce in New York.

Petrominerales Rallies

Petrominerales Ltd. (PMG), the second-worst performing stock in the S&P/TSX Energy Index this year, rose 13 percent to C$8.59 after reporting third-quarter adjusted earnings of 41 cents a share, compared with median analyst estimates of 39 cents a share, according to data compiled by Bloomberg.

SNC-Lavalin Group Inc. (SNC), Canada’s largest engineering and construction company, increased 2.1 percent to C$43.05.

Trevor Johnson, analyst with National Bank Financial, raised the stock to an outperform from sector perform rating, citing an “encouraging” third quarter and a new, energetic chief executive officer in Robert Card, who has “started off on the right foot.”

Silver Wheaton fell 1.4 percent to C$38.88 after posting adjusted earnings of 34 cents a share, short of analysts’ expectations of 40 cents, according to data compiled by Bloomberg. The stock has risen 32 percent this year, compared with a 2.8 percent loss in the S&P/TSX Materials Index. The company also cut its quarterly dividend to 7 cents a share, compared with 10 cents previously.

Fortress Paper Ltd. (FTP) plunged 40 percent to C$7.84, the most since its 2007 initial public offering, after reporting a larger-than-forecast loss in the third quarter that prompted analysts at firms including Raymond James Financial Inc. to downgrade the stock.

The Second Cup Ltd. (SCU) tumbled 20 percent to C$5.88, its worst loss ever. The coffee-shop franchisor cut its dividend to 8.5 Canadian cents a share from 15 cents after reporting same-store sales declines in the third quarter.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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