Canadian Stocks Retreat as Gold, Copper, Natural Gas Decline

Canadian stocks fell for a third day as fuels retreated on forecasts for warmer U.S. weather and metals dropped on speculation China may boost interest rates.

Barrick Gold Corp., the world’s largest producer, slipped 1.5 percent as metal slumped to a December low. Suncor Energy Inc., Canada’s biggest oil and gas producer, declined 1.2 percent. George Weston Ltd., the majority owner of Loblaw Cos., surged 4.4 percent after announcing a special dividend.

The Standard & Poor’s/TSX Composite Index lost 47.84 points, or 0.4 percent, to a one-week low of 13,181.23. The index has slipped 0.4 percent this week after the People’s Bank of China raised bank reserve requirements for the third time in a month.

“We know China is trying to shut the taps down a bit. That’s like a two-by-four to the head,” said Robert “Hap” Sneddon, president of Oakville, Ontario, money manager Castlemoore Inc. and vice president of the Canadian Society of Technical Analysts. “If they go and start to use actual prime rates or lending rates, that’s a much more overt thing to the public.”

The S&P/TSX’s monthly gain of 1.8 percent is the fourth- smallest among 24 developed-market benchmarks. The gap between the year-to-date advance of the S&P/TSX and that of the S&P 500 has shrunk to 0.8 percentage points, after the Canadian index outgained its U.S. counterpart each of the past six years.

The Thomson Reuters/Jefferies CRB Commodity Price Index decreased for a third day today after Liu Li-Gang, a Hong Kong- based economist at Australia & New Zealand Banking Group Ltd., said in a report that China may raise interest rates this month to stem inflation.

Gold, Silver Fall

Precious-metals companies led today’s decline as gold futures dropped 1.1 percent in New York and silver fell 1.6 percent.

Barrick lost 1.5 percent to C$51.97. Silver reseller Silver Wheaton Corp. decreased 1.3 percent to C$37.58. Detour Gold Corp., which is developing a mine in northern Ontario, tumbled 5.8 percent to C$29.10.

Agnico-Eagle Mines Ltd., Canada’s fifth-largest gold producer, slumped 5.7 percent, the most in a year, to C$76.16. The company reduced its estimates for production over the next three years by 1 percent to 4 percent, Anita Soni, an analyst at Credit Suisse Group AG, said in a note to clients. At least three analysts, including Soni, cut their share-price estimates on the stock.

Agnico-Eagle shares have declined for eight straight days, the longest streak in 13 months.

Warmer Weather

Natural gas futures retreated for a third day to the lowest since Nov. 18 after the U.S. National Weather Service forecast above-normal temperatures for much of the country for Dec. 23 to Dec. 29. Prices slumped further after the U.S. said inventories of the fuel fell less than most economists in a Bloomberg survey forecast.

Suncor decreased 1.2 percent to C$36.48. Nexen Inc., an oil and gas company with operations on five continents, dropped 2.3 percent to C$21.53. Arc Energy Trust, a western Canadian oil and gas producer, declined 2.6 percent to C$23.33 after Kurt Molnar, an analyst at Stifel Financial Corp., cut his rating on the company to “hold” from “buy.”

Teck Resources Ltd., Canada’s largest base-metals and coal producer, lost 0.6 percent to C$56.20 as copper inventories neared a one-month high. Inmet Mining Corp., which produces copper, gold and zinc, slumped 3.7 percent to C$75.42.

Special Dividend

George Weston soared 4.4 percent to C$82.86 after announcing a one-time dividend of C$7.75 a share payable Jan. 25. Winston Lee, a Credit Suisse analyst, raised his share-price estimate on the stock to C$89 from C$85. In a note to clients, Lee said there is now a 50 percent chance George Weston will receive an offer to be taken private at about C$100 a share.

Tour operator and airline Transat A.T. Inc. gained 9.8 percent, the most this year, to C$19.48. The company released fourth-quarter earnings that topped the average analyst estimate by 88 percent, excluding certain items.

Manulife Financial Corp., North America’s fourth-largest insurer, advanced 2 percent to a six-month high of C$16.98. Tom MacKinnon, an analyst at Bank of Montreal, raised his share- price estimate on Manulife to C$20 from C$18, telling clients in a note the stock is undervalued considering its book value, return on equity and estimated profit.

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

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

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