Canadian Stocks Drop as Alaska Pipeline Restarts, Oil Declines

Canadian stocks fell, led by energy producers, as an Alaska pipeline prepared to restart and Chinese stocks dropped the most in two months.

Penn West Petroleum Ltd. (PWT), which produces oil and gas in western Canada, lost 1.1 percent as oil retreated. Tim Hortons Inc. (THI), Canada’s biggest fast-food chain, dropped 2 percent after Irene Nattel, an analyst at Royal Bank of Canada, cut her rating on the stock. Ivanhoe Mines Ltd. (IVN), which is building a copper and gold mine in Mongolia with Rio Tinto Group, declined 2.4 percent one trading day after China raised banks’ reserve requirements for the fourth time in just over two months.

The Standard & Poor’s/TSX Composite Index (SPTSX) slipped 23.95 points, or 0.2 percent, to 13,440.11.

“China took a selloff, which was a delayed reaction to the rate hike. That got a bit of a negative bias to the commodity trade,” said Greg Taylor, who helps oversee C$5 billion ($5.07 billion) as a money manager at Aurion Capital Management in Toronto. “Having Shanghai roll over is enough of a reason for people to start taking some profits. It starts the fear that a bit of a correction comes in some of the” most-volatile stocks.

The S&P/TSX has fallen less than 0.1 percent this month after surging 19 percent in the second half of 2010. The benchmark’s raw-materials stocks have plunged 5.1 percent. Raw-materials companies make up 23 percent of Canadian stocks by market value.

An index of S&P/TSX energy companies retreated for the first time in five days as crude futures fell as much as 0.8 percent. Alyeska Pipeline Service Co. said oil should begin flowing through the Trans Alaska Pipeline System today after a Jan. 8 breach. The line carries 11 percent of U.S. crude.

Cut Production

The closure of the pipeline forced BP Plc, Exxon Mobil Corp. and ConocoPhillips to cut production from the North Slope area, pushing up crude prices.

Penn West dropped from a 27-month high to C$25.08. EnCana Corp. (ECA), Canada’s natural gas producer, decreased 0.9 percent to C$30.93. Pacific Rubiales Energy Corp. (PRE), which produces oil in Colombia, declined 1.6 percent to C$32.07.

Oil and gas producer Ivanhoe Energy Inc. (IE) soared 8 percent to C$3.38 after announcing a natural gas discovery in China.

Gasfrac Energy Services Inc. (GFS), an oilfield services company, sank 19 percent, the most since going public in a reverse takeover in August, to C$9.61. On Jan. 16, the company said it has suspended operations at one location due to a leak and fire. Michael Mazar, an analyst at Bank of Montreal, reduced his rating on the stock to “underperform” from “outperform.”

Thirteen of 15 S&P/TSX raw-materials stocks retreated today after the Shanghai Composite Index sank 3 percent. China is the world’s largest consumer of metals used in industry.

China Demand

Growth of copper consumption in China may decline almost 50 percent in 2011 as the country tries to cool its economy, Michael Jansen, a metals strategist at JPMorgan Chase & Co., said at a Shanghai conference Jan. 15.

Ivanhoe Mines lost 2.4 percent to C$25. Equinox Minerals Ltd., which mines copper in Africa, dropped 1.7 percent to C$5.76. Western Coal Corp., the coal producer that has agreed to be bought by Walter Energy Inc., fell 1.4 percent to C$12.28.

High River Gold Mines Ltd., which mines in Russia and Africa, jumped 14 percent to C$1.38. OAO Severstal, which owns a majority stake in High River, began an initial public offering of its Nord Gold NV unit.

Nautilus Minerals Inc. (NUS), which plans to mine gold and copper from beneath the ocean floor, soared 21 percent, the most in 25 months, to C$2.66 after saying it has received a mining lease from Papua New Guinea.

Tim Hortons dropped 2 percent, the most in four months, to C$41.30. Nattel cut her rating to “sector perform” after rating it “outperform” since at least 2006. In a note to clients, the analyst said the stock is more expensive per dollar of forecast profit than McDonald’s Corp.

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.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.