Canadian Stocks Retreat on Lower Gold Prices; Magna Declines

Canadian stocks fell for the first time in four days after gold futures dropped as the metal lost appeal as an alternative investment following a U.S. employment report that was stronger than forecast.

Barrick Gold Corp., the world’s largest producer, declined 1.9 percent as gold stocks retreated after surging 4.1 percent since protests erupted in Egypt last week. Magna International Inc., Canada’s biggest auto-parts maker, lost 5.8 percent as U.S. carmakers closed 24 assembly plants because of a snowstorm. Teck Resources Ltd., the country’s largest base-metals and coal producer, rose 2.1 percent as the employment report added to signals of economic growth.

The Standard & Poor’s/TSX Composite Index slipped 32.33 points, or 0.2 percent, from a 29-month high to 13,680.29.

“Last week, when gold outperformed, it was the fear trade coming back,” said Keith McLean, who oversees C$150 million ($152 million) as a money manager at GMP Investment Management in Toronto. “We were going into a period where fundamentals mattered less and fear mattered more. As we’ve come back from that fear and people understand the macro environment is very good, it sets up a very bullish picture for some of the consumed commodities” like copper and oil.

The index had increased 3.4 percent from Jan. 25 to yesterday, led by energy and raw-materials stocks, as oil and gold advanced on the strife in Egypt while base metals rose on signs of manufacturing expansion in the U.S., China and Europe.

‘Conciliatory Voices’

“People are looking at the Egyptian situation, and the people in charge of those questionable countries are acting the way they should be,” McLean said. “They’re using conciliatory voices. I’m pretty confident that we can move on.”

Gold futures fell 0.6 percent to $1,332.10 an ounce in New York. U.S. employment increased by 187,000 jobs last month after a revised 247,000 gain in December that was less than initially estimated, according to figures from ADP Employer Services. The median estimate in a Bloomberg survey called for a 140,000 gain.

Barrick dropped 1.9 percent to C$46.94. Goldcorp Inc., the world’s second-largest producer of the metal by market value, declined 1.2 percent to C$40.32. Eldorado Gold Corp., Canada’s fifth-biggest gold-mining company by market value, lost 1.7 percent to C$16.04.

Copper fell from a record high, dropping 0.3 cent to $4.544. Teck rose 2.1 percent to C$63.70.

First Quantum

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, gained 1.2 percent to C$123.71 after David Radclyffe, an analyst at Bank of Montreal, said it would be an attractive acquisition candidate for Freeport- McMoRan Copper & Gold Inc.

Magna lost 5.8 percent, the most since June 2009, to C$55.11 as the weather shut factories in the U.S. Midwest. Also today, Morgan Stanley cut its 2011 profit forecast for Ford Motor Co., a Magna customer, to $2.40 a share from $3 a share.

Most S&P/TSX energy companies retreated after the group rallied to a 28-month high yesterday on concern that the Middle East conflict may interfere with crude supplies.

Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, lost 1.5 percent to C$44.30. Pacific Rubiales Energy Corp., which produces oil and gas in Colombia, slumped 2.4 percent to C$33.60. Penn West Petroleum Ltd, a western Canadian oil producer, slipped 1.4 percent to C$26.84.

Opti Canada Inc., Nexen Inc.’s partner in oil-sands development, plunged a record 40 percent to 27 cents after sinking 35 percent yesterday. Moody’s Investors Service reduced its corporate family credit rating on the company to Caa3 from Caa2, citing Opti’s “declining liquidity and our view that the company will be unable to meet all of its cash requirements in 2011.”

Ballard Power Systems Inc., a maker of hydrogen fuel cells, soared 27 percent, the most in 16 months, to C$2.12. The company reported a third-quarter loss of 1 cent a share, 89 percent narrower than the average of four analyst estimates, excluding certain items.

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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