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Canada Stocks Fall as Commodity Shares Drop on Economic Concerns

Canadian stocks fell for a fourth day as energy and materials producers tumbled after Spain’s debt rating was cut and U.S. jobless claims rose, spurring concern that global growth will slow.

Suncor Energy Inc. (SU), Canada’s biggest energy producer, fell 3.3 percent as crude oil dropped. Canadian Natural Resources Ltd. (CNQ) fell 3 percent. Potash Corp. of Saskatchewan Inc. declined 2.9 percent as corn and wheat futures slipped. Barrick Gold Corp. (ABX) slumped 1.7 percent as the precious metal retreated.

The Standard & Poor’s/TSX Composite Index declined 246.13 points, or 1.8 percent, to close at 13,638.58 in Toronto. That’s the biggest drop since Aug. 11, and takes the gauge to its lowest level since Jan. 31.

“After eight months on the TSX of unstoppable rally, we’ve hit a lull,” said Barry Schwartz, vice president at Baskin Financial Services Inc. in Toronto, who helps manage about C$390 million ($400 million). “The geopolitical crises are finally getting investors’ attention and the front page news on potential defaults and downgrades of European debt, combined with non-stop bad news out of the Middle East and northern Africa have finally taken the upper hand.”

A subgroup of energy producers in the S&P/TSX has dropped 6.7 percent since March 4 on concern higher oil prices will slow the global economic recovery. Energy and material producers make up 49 percent of Canadian stocks by market value.

Claims Surge

U.S. applications for first-time unemployment benefits increased by 26,000 to 397,000 in the week ended March 5, Labor Department figures showed. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey.

The U.S. trade deficit increased 15 percent to $46.3 billion, from $40.3 billion in December, Commerce Department figures showed today in Washington, as a surge in imports led by costlier oil overshadowed record exports.

China’s export growth was the slowest since 2009 and German exports dropped 1 percent in January from December. Moody’s Investors Service cut Spain’s rating by one level to Aa2, saying the government underestimated the cost of shoring up its banking industry.

Libyan rebels fled a key oil hub on the Mediterranean coast even as the insurgency’s leaders won recognition from French President Nicolas Sarkozy of the transitional government set up to oppose Muammar Qaddafi.

Oil Declines

Crude pared losses, with oil for April delivery declining 1.6 percent to settle at $102.70 a barrel in New York, after the Associated Press reported that police in Saudi Arabia, the Middle East’s biggest producer, opened fire at a rally in the east of the country.

Suncor slumped 3.3 percent to C$41.67, the lowest price since Feb. 14. Canadian Natural dropped 3 percent to C$44.94. Cenovus Energy Inc. (CVE) declined 3.7 percent to C$35.28.

“The sectors that have done so well over the last two years commodities like base metals, energy, and food are the ones that will take the biggest hits,” Schwartz said. “These are the sectors that are the most volatile and the ones tied most to economic growth.”

Potash Corp. declined 2.9 percent to C$52.47, the lowest price since Jan. 4. Agrium Inc. slipped 2.3 percent to C$86.04. Corn futures fell 2.6 percent and wheat sank 2.4 percent.

Bullion Falls

A subgroup of gold producers in the Canadian benchmark equity index fell 2.5 percent after gold futures dropped the most in a week. A stronger U.S. dollar prompted some investors to sell the metal after unrest in the Middle East and northern Africa pushed prices to a record.

Barrick Gold declined 1.7 percent to C$49.13, the lowest price since Feb. 16. Goldcorp Inc. (G) fell 2.4 percent to C$46.01.

Transat A.T. Inc., Canada’s largest tour operator, slumped 29 percent to C$11.81, the biggest drop in the S&P/TSX Index. The Montreal-based company reported first-quarter revenue of C$810.2 million, missing the average analyst estimate of C$837.2 million, Bloomberg data show.

Alimentation Couche-Tard Inc. (ATD/B) advanced 2.5 percent to C$25.35, the biggest gain in the Canadian benchmark equity index. The owner of Circle K convenience stores reported third- quarter adjusted profit of 38 cents a share, beating the average analyst estimate by 2.2 percent, Bloomberg data show.

To contact the reporter on this story: Jennifer Johnson in New York at jjohnson156@bloomberg.net

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

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