Canadian Stocks Fall as Gold Drops on U.S. Manufacturing Growth

Canadian stocks fell, led by precious-metal producers, as gold dropped the most since July.

Barrick Gold Corp., the world’s largest gold producer, dropped 2.9 percent after U.S. manufacturing and construction reports boosted confidence in the economy. Teck Resources Ltd., Canada’s biggest base-metals and coal producer, advanced 1.7 percent after the Institute for Supply Management’s gauge of U.S. manufacturing climbed to a seven-month high.

The Standard & Poor’s/TSX Composite Index slipped 40.91 points, or 0.3 percent, to 13,402.31 at 4 p.m. in Toronto. Canadian markets were closed yesterday when the U.S. Commerce Department said construction spending rose 0.4 percent in November, twice the median forecast of economists in a Bloomberg survey.

“Gold is a bit of a safe haven for people,” said Doug Davis, vice chairman of Toronto money manager Davis-Rea Ltd., which manages C$400 million ($401 million). “If they think it’s time to get a little less safe, they may move some money out of gold.”

The S&P/TSX surged 14 percent in 2010 as gold jumped 30 percent on concern central-bank stimulus programs may spur future inflation. Eight of the world’s 20 largest gold producers are Canadian.

An index of S&P/TSX gold companies declined the most since Oct. 19 as the economic data encouraged investors to leave the safety of hard assets. U.S. factory orders increased 0.7 percent in November, the Commerce Department said today in Washington. Most analysts in a Bloomberg survey had forecast a decline.

Gold, Silver

Gold fell 3.1 percent to $1,378.80, and silver dropped 5.2 percent.

Barrick lost 2.9 percent to C$51.59. Goldcorp Inc., the world’s second-largest gold producer by market value, retreated 3 percent to C$44.50. Fronteer Gold Inc., which explores in the U.S., Turkey and Canada, sank 6.3 percent to C$10.89.

Agnico-Eagle Mines Ltd., Canada’s fifth-largest gold producer, tumbled 6.4 percent to C$71.72 after analysts at Royal Bank of Canada and Canadian Imperial Bank of Commerce cut their share-price forecasts on the stock.

Barry Cooper, a CIBC analyst, reduced his 18-month share- price estimate to $100 from $102, telling clients in a note that the company’s Pinos Altos mine in Mexico has lost almost 25 percent of its value with new mine plans.

Producers of materials used in industry rallied as flooding in Australia boosted speculation of higher coal prices in China.

Alberta Mines

Teck rose for a fourth day, gaining 1.7 percent to C$62.84. Grande Cache Coal Corp., which mines in Alberta, soared 5 percent to C$10.99, a five-year high. SouthGobi Resources Ltd., which produces coal in Mongolia, jumped 9.9 percent to C$13.38.

Avalon Rare Metals Inc., which explores for rare-earth elements in Canada, surged 17 percent to C$7.28 to bring its gain since Dec. 20 to 79 percent. Analysts at Dahlman Rose & Co. yesterday increased price forecasts for some rare-earth metals.

Magna International Inc., Canada’s largest auto-parts maker, increased 7.7 percent to C$55.90 as General Motors Co., Ford Motor Co. and Chrysler Group LLC reported sales climbed more than analysts forecast in December.

Some energy stocks gained a day after natural gas climbed to a five-month high. Forecasts showed temperatures may be as much as 15 degrees Fahrenheit below normal in parts of the U.S. Midwest from Jan. 13 to Jan. 17, according to Community Weather Group in Bethesda, Maryland.

EnCana Corp., Canada’s biggest natural gas producer, rose 0.8 percent to C$29.31. Penn West Energy Trust, which produces oil and gas in Canada, advanced for the first time in five days, increasing 2.8 percent to C$24.50.

White Tiger Gold Ltd., which explores for gold in Siberia, soared 85 percent to C$3.23 in its second day of trading. The company had sold subscription receipts, which converted to shares, for C$1 each last month.

To contact the reporter 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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