Canadian Stocks Fall at Close as Natural Gas Drops, UBS Cuts Potash View

Canadian stocks fell for the first time in seven days after UBS AG cut its 2011 forecast for potash prices and natural gas declined on concern U.S. stockpiles are too high.

Potash Corp. of Saskatchewan, the world’s largest fertilizer producer, dropped 2.3 percent on the comments from UBS analyst Joe Dewhurst. EnCana Corp., Canada’s largest natural gas producer, lost 1 percent as the fuel decreased 3.2 percent. Barrick Gold Corp., the world’s largest gold producer, gained 2 percent as precious-metal futures climbed for a second day.

The Standard & Poor’s/TSX Composite Index retreated 18.38 points, or 0.2 percent, to 11,927.59. The index was up the entire day, dropping below yesterday’s close only as the stock exchange adjusted at 4:10 p.m. for orders executed at the close of trading. The benchmark has fallen 2.9 percent since April 26 on concern Europe’s debt crisis will curb world growth.

“Markets have been trading wildly at the close for weeks now,” said Derek Webb, president of Webb Asset Management Inc. (USA) in San Francisco, which manages C$40 million ($39.2 million) for Canadian and U.S. clients. “Anytime there’s fear, volatility goes up. We entered a fear cycle with Europe blowing up.”

The S&P/TSX rallied 4.3 percent during its streak of gains, which overlapped an eight-day run for the Reuters/Jefferies CRB Commodity Price Index. Energy and raw-materials companies make up 46 percent of Canadian stocks by market value.

Fertilizer Forecast

Potash Corp. declined 2.3 percent to C$101.10 after Dewhurst reduced his 2011 potash forecast to $370 a metric ton from $450 a ton. Dewhurst wrote that potash, which traded at more than $900 a ton in 2008, will remain below $550 a ton until at least 2020.

Agrium Inc., Canada’s second-largest fertilizer producer, lost 1.4 percent to C$53.17.

Natural gas slumped a day after the U.S. Energy Department reported supplies of 2.543 trillion cubic feet, 14 percent over the five-year average. The fuel has surged 15 percent this month as alternatives to offshore drilling for oil have received more attention.

EnCana decreased 1 percent to C$35.24. Suncor Energy Inc., Canada’s largest oil and gas company, slipped 0.8 percent to C$34.44. Enbridge Inc., the country’s biggest pipeline company, retreated 1.1 percent to C$49.21.

Gold for August delivery rose 0.8 percent to $1,258.30 an ounce after Chinese lawmaker Yin Zhongqing told a conference the country should increase its holdings of precious metals and oil.

Mining Companies

Barrick gained for a fourth day, advancing 2 percent to C$47.01. Goldcorp Inc., Canada’s second-largest gold producer, increased 0.8 percent to C$46.51. NovaGold Resources Inc., which explores in the U.S. and Canada, surged 7.3 percent to C$7.67 the biggest gain in the S&P/TSX.

Gammon Gold Inc., which operates in Mexico, decreased for a sixth day, losing 4 percent to C$6.76 on a downgrade to “neutral” from “buy” by UBS analyst Dan Rollins. The company slumped 9.3 percent yesterday after saying it closed a mine indefinitely due to a labor dispute.

Soft drink maker Cott Corp. had the biggest decline in the S&P/TSX with a 8.8 percent retreat to C$7.39 after Stifel Financial Corp. analyst Mark Swartzberg cut his rating on the stock to “hold” from “buy.” Swartzberg told clients Wal-Mart is selling other soft drinks at the same price or cheaper than the Sam’s Choice private-label beverages Cott makes for the retailer.

Forest-products company Tembec Inc. soared 28 percent, the most in 14 months, to C$2.22. The company said earnings before interest, taxes, depreciation and amortization should rise to C$47 million to C$53 million this quarter from C$32 million in the quarter ended in March.

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

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