Bloomberg News

Canada Stocks Fall as Banks Slump on Europe Debt Concern

February 04, 2013

Canadian stocks retreated as financial and commodity shares slumped on renewed concern about Europe’s debt crisis.

Petrobank Energy & Resources Ltd. and Cenovus Energy Inc. lost more than 1.5 percent as oil prices declined. Royal Bank of Canada and Toronto-Dominion Bank slid at least 0.7 percent. Canadian Pacific Railway Ltd. dropped 2.1 percent after hiring Keith Creel away from rival Canadian National Railway Co. BlackBerry, formerly known as Research In Motion Ltd., rose 15 percent after Sanford C. Bernstein & Co. raised its rating.

The Standard & Poor’s/TSX Composite Index (SPTSX) lost 51.21 points, or 0.4 percent, to 12,717.62 at 4 p.m. in Toronto. The benchmark gouge has gained 2.3 percent this year. Nine of 10 industries retreated today. About 695 million shares traded hands on Canadian exchanges today, or 8.4 percent below the three-month average.

“You can’t go straight up, you need a time for pause and reflection and to catch your bearings,” Barry Schwartz, who helps manage C$480 million ($476 million) as a fund manager at Toronto-based Baskin Financial Services, said in a phone interview. “Commodities continue to be beaten and thrown to the curb and misused and abused, and I think that’s going to be the trend that will continue.”

Spanish 10-year government yields jumped 23 basis points to 5.44 percent and Italy’s rates jumped as well. Spanish Premier Mariano Rajoy is facing opposition calls to resign amid contested reports about illegal payments, while Deutsche Bank AG said this year’s rally in Italian and Spanish bonds may falter as Italy’s Silvio Berlusconi narrowed the front-runner’s lead before elections this month.

Banks Slump

An index of financial shares in the S&P/TSX lost 0.5 percent. Royal Bank of Canada dropped 0.5 percent to C$62.21 and Toronto-Dominion Bank slid 0.7 percent to C$82.96.

Petrobank Energy, an oil and gas explorer, fell 2.2 percent to 88 Canadian cents. Cenovus Energy, a Canadian oil producer, dropped 1.5 percent to C$33.20. Crude oil for March delivery slid 1.6 percent to $96.17 a barrel on the New York Mercantile Exchange, the most in two months, as the prospect of renewed talks between Western countries and Iran reduced Middle East tension.

Teck Resources Ltd., which mines gold and other natural resources, retreated 1.3 percent to C$36.51. New Gold Inc., the Vancouver-based gold explorer, dropped 2.3 percent to C$9.89. Gold futures for April delivery gained 0.3 percent to $1,676.40 an ounce on the Comex in New York.

Turquoise Hill Resources Ltd., which owns 66 percent of the Oyu Tolgoi gold and copper mine in Southern Mongolia, fell 1.3 percent to C$7.57. Mongolia’s President Tsakhia Elbegdorj said the nation should have more control of Rio Tinto Group’s Oyu Tolgoi project after the government claimed costs had increased.

Rail Companies

Canadian Pacific Railway slid C$2.40 to C$113.38. The company hired Creel away from Canadian National Railway and named him president and chief operating officer to assist Chief Executive Officer Hunter Harrison in his turnaround plan. The companies reached a settlement to end their outstanding litigation linked to Harrison’s move to Canadian Pacific last year, Canadian National said in a separate release.

Canadian National slipped 0.6 percent to C$95.14.

Kirkland Lake Gold Inc. (KGI) rose 5.7 percent to C$6.47. The gold mining company said it remains on track to meet its production guidance for the current fiscal year.

BlackBerry rallied C$1.98 to C$14.99, for the biggest gain since November, as technology companies had the only advance among 10 groups in the S&P/TSX. Sanford C. Bernstein analyst Pierre Ferragu upgraded the company to outperform from market perform, citing a strong start in the first days of sales for the BlackBerry 10. BlackBerry shares tumbled 26 percent last week amid the introduction of the new smartphones.

Harry Winston Diamond Corp. was unchanged at C$14.70, erasing earlier gains of up to 2 percent. The luxury jewelry retailer said C. Fipke Holdings Ltd. ended court action brought against it, BHP Billiton Ltd. and other companies. The minority stakeholder of the Ekati diamond mine sued to block Harry Winston’s proposed acquisition of BHP’s 80 percent share of the Canadian operation.

To contact the reporter on this story: Sarah Pringle in New York at springle1@bloomberg.net

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


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