Canada Stocks Pare Monthly Gain as Economy Grows More Slowly Than Forecast
Canadian stocks fell, paring a monthly gain, after Canada and the U.S. reported smaller increases in economic growth than economists had forecast.
Toronto-Dominion Bank, the country’s second-largest bank, lost 1.1 percent as lenders retreated for the first time in seven days. BlackBerry maker Research In Motion Ltd. gained 2.6 percent after two people familiar with the company’s plans said it will market a rival to Apple Inc.’s iPad in November. Canadian Oil Sands Trust, the largest owner of the Syncrude project, dropped 2.2 percent after cutting its 2010 production forecast.
The Standard & Poor’s/TSX Composite Index fell 15.21 points, or 0.1 percent, to 11,713.43. The S&P/TSX gained 3.7 percent this month as commodities rallied in response to stronger-than-forecast corporate earnings worldwide. The Thomson Reuters/Jefferies CRB Commodity Price Index advanced 6.1 percent this month, with copper surging 12 percent, the most in a year.
“How self-sustaining is this economy? That’s what people are questioning,” said Bob Decker, who helps oversee C$4.2 billion ($4.07 billion) as a money manager at Aurion Capital Management in Toronto. “No one disputes we’ve got a recovery in earnings. It’s the sustainability of the recovery that’s being questioned.”
Canadian gross domestic product increased 0.1 percent in May, Statistics Canada said. Economists in a Bloomberg survey had estimated that economic growth climbed 0.2 percent, based on the median estimate in a Bloomberg Survey.
U.S. Growth
U.S. GDP advanced at an annualized rate of 2.4 percent in the second quarter, the Commerce Department said in Washington, trailing the median economist estimate of 2.6 percent. The rate of increase in consumer spending eased from the first quarter.
The S&P/TSX Energy Index retreated for a fourth day, due largely to Canadian Oil Sands, which had its 12-month unit-price estimate cut to C$31 from C$34.50 by TD analyst Jeff Meunier.
Canadian Oil Sands dropped 2.2 percent to C$26.96. Nexen Inc., an oil and gas producer with operations on five continents, declined 1.2 percent to C$21.35. Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, lost 1.1 percent to C$35.40.
Five of the six largest publicly traded Canadian banks declined. TD decreased 1.1 percent to C$73.16. Royal Bank of Canada, the country’s largest bank, slipped 0.6 percent to C$53.72. Canadian Imperial Bank of Commerce, the No. 5 bank by assets, retreated 0.6 percent to C$70.60.
RIM Rises
RIM rose for a third day, gaining 2.6 percent to C$59.15 after Bloomberg News reported it will introduce a “Blackpad” tablet. The company’s worldwide smartphone shipments increased the most among the top five handset makers in the second quarter, researcher Strategy Analytics said today.
First Quantum Minerals Ltd., the second-largest Canada- based copper producer, sank 4.5 percent to C$64.42, adding to yesterday’s 4.7 percent slump. A parliamentary committee in Zambia has called for the reintroduction of a windfall tax on copper sales above $2.50 a pound, UBS AG analyst Onno Rutten said in a note to clients.
Viterra Inc., Canada’s largest grain handler, fell 4.2 percent to C$8.05 after competitor GrainCorp Ltd. agreed to buy AWB Ltd. for A$803 million ($723 million). The purchase may help GrainCorp challenge Viterra and Cargill Inc. for market share in Asia.
Earnings
Companies such as MacDonald, Dettwiler and Associates Ltd. and Domtar Corp. continued to rally after reporting financial results. Fourteen of 25 S&P/TSX companies that have reported quarterly profit over the past two days have beaten the average analyst estimate.
Aerospace and defense contractor MacDonald, Dettwiler increased 6.7 percent to a two-year high of C$48. The company, which also provides real-estate data, reported second-quarter revenue of C$258.4 million, topping the average of seven analyst estimates by 3.5 percent.
Domtar, North America’s largest maker of paper for copiers and envelopes, surged 8.5 percent to C$60.24 after its second- quarter profit beat the average of 16 analyst forecasts by 65 percent, excluding certain items. The company’s adjusted net income of $116 million was the most in a quarter since at least 2006.
Sierra Wireless Inc., a telecommunications equipment maker, surpassed the average profit forecast of 14 analysts by 79 percent, excluding certain items. Shares jumped 23 percent, the most in four years, to C$9.65.
To contact the reporter on this story; Matt Walcoff in Toronto at mwalcoff1@bloomberg.net
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