Canadian Stocks Decline on U.S. Unemployment Claims Report; Oil Retreats

Canadian stocks fell, driving the benchmark gauge to the lowest level since July 21, as unemployment claims unexpectedly rose in the U.S. and crude oil slipped below $77 a barrel for the first time this month.

Suncor Energy Inc., the country’s largest oil and gas producer, slumped 1.2 percent as crude retreated for a third day. Canadian Natural Resources Ltd., the nation’s second- largest oil producer by market value, tumbled 2.4 percent. Barrick Gold Corp., the world’s largest producer of the metal, gained 1.7 percent as gold advanced on signs the global economic recovery is slowing.

The Standard & Poor’s/TSX Composite Index lost 58.61 points, or 0.5 percent, to 11,523.60 at 4:12 p.m. in Toronto. Among S&P/TSX stocks, 125 fell, 100 rose and 4 were unchanged.

“Jobless claims builds on the negative side of things,” said Greg Eckel, who helps manage about C$900 million ($850 million) at Morgan Meighen & Associates Ltd. in Toronto. “Two of the big factors that are required for the recovery are jobs and the housing sector. It’s a carrying on of what’s bothered the market in the last one or two days. It’s very volatile and willing to move on each and every piece of news out.”

This week, the U.S. Federal Reserve said it will reinvest principal payments on mortgage securities it owns into Treasuries in its first attempt to boost growth since March 2009, casting doubt on the strength of the economic recovery in Canada’s largest trading partner. The U.S. trade deficit and weekly initial jobless claims were higher than expected.

S&P/TSX Performance

The S&P/TSX has declined 1.9 percent this year as U.S. unemployment above 9 percent reduced the impact of stronger- than-forecast corporate earnings. The Thomson Reuters/Jefferies CRB Index of commodities dropped 5.1 percent. Energy and raw- materials companies make up 46 percent of Canadian stocks by market value.

More Americans than expected filed applications for unemployment insurance last week, signaling layoffs stepped up as the economy slowed. Initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid- February, U.S. Labor Department figures showed today.

Industrial companies declined 0.6 percent, helped by Canadian Pacific Railway Ltd., which fell 2.3 percent to C$58.72.

Crude oil declined for a third day after U.S. jobless claims increased, bolstering concern that economic growth will slow and fuel demand will drop. Suncor Energy lost 1.2 percent to C$32.94. Canadian Natural Resources sank 2.4 percent to C$33.89.

Third Biggest

Petrobank Energy & Resources Ltd., the oil and natural-gas producer, fell 4.6 percent to $38.18 for the third-biggest decline in the S&P/TSX.

Pacific Rubiales Energy Corp. dropped 3.4 percent to C$24.48. The oil producer that operates fields in Colombia was cut to “neutral” from “outperform” at Macquarie Group Ltd.

Provident Energy Trust slipped 2.9 percent to C$6.63. The company that processes, stores, transports and markets natural gas liquids was cut to “sector perform” from “outperform” at National Bank Financial.

Nexen Inc. slumped 1.7 percent to C$20.32. The Calgary- based oil and gas producer’s bitumen shipments have been curtailed because of Enbridge Energy Parters LP’s oil leak in a line in its Lakehead System.

Mining Companies

Quadra FNX Mining Ltd. declined 4.8 percent to C$11. The owner of mines in Nevada, Arizona and northern Chile posted a second-quarter profit of 15 cents a share, trailing the average analyst estimate of 24 cents, according to Bloomberg data.

Gildan Activewear Inc. slumped the most in the index, retreating 3.8 percent to C$30.30. The clothing maker with operations in the U.S., Haiti and Central America forecast a loss of 16 cents a share for fiscal 2010 because of the Haiti earthquake.

Technology shares lost the most in the S&P/TSX, led by Research In Motion Ltd., which tumbled 4 percent to C$56.44. The meeting held by India’s home ministry and the Department of Telecommunications to discuss security issues related to some of the company’s BlackBerry services was inconclusive, the ministry’s spokesman said in New Delhi. India has given RIM until Aug. 31 to resolve the government’s concerns over some of BlackBerry services, a home ministry official said.

Tim Hortons Surges

Tim Hortons Inc. surged 6.2 percent to C$37.63 for the second-biggest gain in the S&P/TSX. Canada’s largest fast-food chain posted second-quarter profit that topped analysts’ estimates and said it is selling its 50 percent stake in Maidstone Bakeries to joint venture partner Aryzta AG for C$475 million in cash.

Gold advanced in New York as investors shield their wealth against economic turmoil. Gold producers helped shares of raw- materials companies rise the most in the S&P/TSX. Aurizon Mines Ltd., which produces gold in Quebec, rose the most, rallying 7.8 percent to C$5.96. Ventana Gold Corp. gained 5.9 percent to C$8.82, Semafo Inc., the gold producer that mines in Africa, jumped 1.8 percent to C$8.41, and Iamgold Corp. advanced 2.5 percent to C$18.53. Barrick Gold rallied 1.7 percent to C$45.06.

Groupe Aeroplan Inc. climbed 9.3 percent to C$10.42 for the second-biggest gain in the S&P/TSX. The Air Canada partner, which operates loyalty-rewards programs, said it will buy back up to 10 percent of its stock.

Finning International Inc. rose 2.9 percent to C$20.51. The Caterpillar Inc. dealer with operations in Canada posted second- quarter profit of 21 cents a share excluding some items, beating the average analyst estimate of 18 cents, according to Bloomberg data.

Health care stocks rose for the second-biggest gain in the S&P/TSX out of 10 industry groups. CML Healthcare Income Fund increased 6.9 percent to C$10.17. The medical-diagnostic tests was raised to “outperform” from “sector perform” at National Bank Financial.

Harry Winston Diamond Corp., the jeweler and diamond-mining company, jumped 3.1 percent to C$11.87 as diamond prices rose to $7,976 this week from $7,968 a week earlier, according to the Rapaport Diamond Trade Index.

To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net.

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