Canada Stocks Fall as Mining Shares Drop on Stronger U.S. Dollar

Canadian stocks fell for a second day, led by mining companies, as precious metal prices declined on speculation that an extension of U.S. tax cuts will boost growth and cut demand for alternative investments.

Goldcorp Inc., Ivanhoe Mines Ltd., Barrick Gold Corp. and Silver Wheaton Corp. were among the biggest contributors to the drop in the Standard & Poor’s/TSX Composite Index. Materials producers, the third-largest of the index’s 10 industries, fell 2 percent as a group, more than any other.

The S&P/TSX lost 98.67 points, or 0.7 percent, to 13,152 as of 4 p.m. in Toronto. The main benchmark for Canadian equities closed at a two-year high on Dec. 6 before slipping yesterday as gold prices retreated from a record after U.S. President Barack Obama agreed to extend tax cuts. Gold extended declines today as the U.S. dollar rose for a third day.

“When you see a significant move in gold like we have today, that will carry a decent impact to the market,” said Philip Petursson, director of institutional equities at MFC Global Investment Management in Toronto.

Barrick Gold, the world’s largest producer of the metal, fell 2.2 percent to C$53.47. Goldcorp, the second-largest by market value, dropped 2.9 percent to C$45.99. Silver Wheaton, a Vancouver-based purchaser and seller of the metal, declined 2.8 percent to C$38.66.

Gold for February delivery dropped 1.8 percent to $1,383.20 an ounce on the New York Mercantile Exchange. Silver for March delivery slid 5.1 percent to $28.252 an ounce after reaching the highest price since March 1980 yesterday.

‘Last Resort’

“In absence of what could be viewed as a very strong reserve currency, gold is that reserve currency of last resort, and silver has been playing catch-up to gold,” Petursson said.

Ivanhoe slumped 15 percent to C$25.28 for the biggest decline in the S&P/TSX. The Vancouver-based miner with operations in Asia and Australia gave Rio Tinto Group the right to boost its stake to 49 percent, making a takeover of Ivanhoe unlikely, Raymond Goldie, an analyst at Salman Partners Inc. in Toronto, wrote in a report.

Manulife Financial Corp. and Toronto-Dominion Bank helped lead gains in insurance companies and banks as rising yields on U.S. Treasury securities maturing in 10-years or more improved the outlook for profit in businesses that are penalized by declining interest rates.

Manulife, Canada’s largest insurer, rose 4 percent to C$15.98. Toronto-Dominion, the country’s second-largest lender, gained 1.4 percent to C$73.20.

Beating Estimates

Major Drilling Group International Inc. rose 7.1 percent to C$39.43 for the biggest gain in the index. The metals and mineral contract drilling service company reported second- quarter profit excluding some items that topped the average of six analyst estimates in a Bloomberg survey by 39 percent.

Transcontinental Inc. rose 5.4 percent to C$16.20. Canada’s largest publisher of consumer magazines reported fourth-quarter adjusted profit of C$0.77 a share, 18 percent higher than the average of 7 analyst estimates in a Bloomberg survey.

Trilogy Energy Corp. rose 6.5 percent to C$12.12. The oil and gas producer said it expects production to increase 15 percent next year to 26,500 barrels of oil equivalent a day.

To contact the reporter on this story; Elizabeth Stanton in New York at estanton@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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