Oct. 15 (Bloomberg) -- Canadian stocks fell, led by raw- materials producers, as gold prices dropped for a second day and factory sales declined more than economists estimated.

Barrick Gold Corp., the world’s largest gold producer, decreased 2 percent as bullion fell. Oil and gas producer Imperial Oil Ltd. rose 3.1 percent after oil prices gained on an unexpected drop in gasoline inventories. Crescent Point Energy Corp. slumped 2.5 percent after announcing a share offering.

“The recovery feels like it’s grinding, painful. The weak economy is struggling to create jobs,” said Adrian Mastracci, president of KCM Wealth Management Inc. in Vancouver. “This is sort of a high-risk time to invest all your money.”

The Standard & Poor’s/TSX Composite Index fell 28.27 points, or 0.3 percent, to 11,504.51.

The Canadian benchmark has gained 28 percent this year, spurred by a 29 percent rise in raw-materials stocks. Canada is the world’s eighth-largest gold producer and home to three of the 10 largest publicly traded gold-mining companies. Bullion prices hit a record on Oct. 13 as the slumping U.S. dollar spurred demand for the precious metal as an alternative asset.

Gold futures slid 1.3 percent as U.S. inflation slowed to 0.2 percent in September, reducing the appeal of precious metals as an alternative investment. Barrick retreated 2 percent to C$40.15 to have the biggest negative influence on the S&P/TSX. European Goldfields Ltd. sank 3.1 percent to C$5.89 after a mine in Greece closed temporarily due to a rockfall that killed a miner.

Factory Sales

Canadian factory sales fell 2.1 percent in September as vehicle shipments dropped. Economists in a Bloomberg survey predicted sales would slide 1.6 percent, the median of 18 estimates.

“The sentiment is positive but positive with some suspicion,” said Sadiq Adatia, who helps manage C$12 billion ($11.6 billion) as chief investment officer at Russell Investments Canada. “Everyone is feeling optimistic about the market and the economy, but at the same time, they see all these other risks still hanging out there.”

Oil rose 3.2 percent to $77.58 a barrel after the U.S. Energy Department said gasoline inventories fell the most since September 2008 last week.

Natural gas prices increased after the U.S. Labor Department’s report on initial unemployment claims gave another indication of a recovering economy that will lead to greater fuel demand. New unemployment applications fell by 10,000 from the previous week to 514,000 last week. The median estimate of analysts surveyed by Bloomberg was for 520,000 new claims.

Oil Shares

Imperial Oil, owner of the Esso chain of gas stations in Canada, increased 3.1 percent to C$44.33. Conventional oil and gas producer Vero Energy Inc. jumped 14 percent to an eight- month high of C$4.88 to lead the S&P/TSX Smallcap Index.

Canadian Oil Sands Trust, co-owner of the Syncrude oil- sands development, slumped 0.3 percent to C$34.15 after analysts at Credit Suisse Group AG and FirstEnergy Capital Corp. cut the stock to the equivalent of “hold.” Brian Dutton of Credit Suisse told clients a revision in Credit Suisse’s view on natural-gas prices and Canadian Oil Sands’ recent unit-price gains make the stock less attractive.

Share Sale

Crescent Point Energy lost 2.5 percent to C$37.58. The western Canadian oil and gas producer said it would sell at least 13.4 million shares at C$37.25 a share. Crescent Point has rallied 56 percent this year.

BlackBerry maker Research In Motion Ltd. fell 0.5 percent to C$70.65 after Finnish competitor Nokia Oyj announced third- quarter earnings that, excluding certain items, trailed the average analyst estimate by 38 percent. Nokia smart-phone sales declined 3 percent by volume from the previous quarter.

Keystone North America Inc., the fifth-largest funeral-home operator on the continent, jumped 20 percent to a 16-month high of C$7.76 after agreeing to support an C$8-a-share takeover bid from Service Corporation International.

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net.

Last Updated: October 15, 2009 16:28 EDT