Canadian Stocks Decline as Investors Sell Gold to Raise Cash

Canadian stocks fell for a second day, led by precious-metal producers, as some investors sold metals to raise cash following declines in world equity markets.

Barrick Gold Corp. (ABX), the world’s largest producer, dropped 2.4 percent as the metal dropped the most since Jan. 4. Teck Resources Ltd. (TCK/B), Canada’s biggest base-metal and coal producer, rose 4.3 percent after the U.S. Federal Reserve said the recovery is gaining strength. Manulife Financial Corp. (MFC), which had 120 life insurance sales offices in Japan on Dec. 31, lost 4.2 percent as the costs of the country’s earthquake mounted.

The Standard & Poor’s/TSX Composite Index declined 72.23 points, or 0.5 percent, to 13,546.96, the lowest level since Jan 31. The S&P/TSX has retreated 4.2 percent this month after eight months of gains.

“People are uncertain about what’s going to happen in Japan,” said David Baskin, president of Toronto-based money manager Baskin Financial Services Inc., which manages about C$400 million ($406 million). “They’re worried, so they’re fleeing to safety. They’re buying U.S. dollars, U.S. Treasury bills and selling pretty much everything else.”

The Canadian stock benchmark fell 4.1 percent last week as the U.S. reported an increase in initial jobless claims and oil dropped from a post-2008 high. The index sank as much as 2.8 percent in the first five minutes of trading today on concern the earthquake, tsunami and nuclear emergency in Japan will cripple Canada’s fourth-biggest export market.

Crisis Continues

Shoppers grabbed water, food and batteries from store shelves in Tokyo as the death count from last week’s events climbed to 2,734. A third explosion occurred at the nuclear power plant north of the city where the cooling system failed after the March 11 earthquake and tsunami.

The Thomson Reuters/Jefferies CRB Commodity Price Index declined the most in four months. Gold dropped 2.3 percent to $1,392.80 an ounce in New York.

Barrick slipped 2.4 percent to C$48.45. Semafo Inc. (SMF), which mines gold in Africa, declined 5.4 percent to C$8.08 a day before it is to release fourth-quarter financial results. Silver reseller Silver Wheaton Corp. (SLW) lost 3.7 percent to C$39.06 as that metal decreased 4.8 percent.

Alamos Gold Inc. (AGI), which mines in Mexico, retreated 6.3 percent to C$15.86 after saying it crushed less ore in January and February than it had planned. This should lead to a smaller profit than previously forecast for the first quarter, Anita Soni, an analyst at Credit Suisse Group AG, wrote in a note to clients.

Renaissance Jeopardized

Uranium One Inc. (UUU), a mining company controlled by Moscow- based ARMZ Uranium Holding, fell 14 percent to C$3.72 as the Japanese crisis jeopardized a renaissance in nuclear power. The shares have plunged 37 percent this week.

Producers of other raw materials rebounded after the Fed’s Open Market Committee, for the first time since September, issued a statement that did not call the recovery “disappointingly slow.”

Teck gained 4.3 percent from a three-month low to C$51.71. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, advanced 2.3 percent to C$113.71 before the scheduled release of its fourth-quarter financial results.

Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, climbed 2.7 percent to C$53.14 after touching a 2011 intraday low.

‘Overdone’

“The market’s saying the selloff has been overdone; agricultural fundamentals remain strong,” Edlain Rodriguez, a New York-based analyst with Gleacher & Co., said today in a telephone interview. “We’ve seen sell-offs like this before, and then the rebound as people come to their senses.”

Thirty-five of 43 stocks in the S&P/TSX Financials Index declined. The Bank of Japan has injected 23 trillion yen ($284 billion) into money markets this week to try to contain investors’ panic.

Manulife, North America’s fourth-largest insurer, lost 4.2 percent to C$16.04 even after saying it doesn’t expect property and casualty reinsurance claims related to the earthquake and tsunami to be material to full-year results.

Royal Bank of Canada (RY), the country’s largest lender by assets, decreased 0.8 percent to C$59.58. Thomson Reuters Corp. (TRI), the financial news and information provider, retreated 2.6 percent to C$37.86.

Aerospace and defense contractor MacDonald, Dettwiler & Associates Ltd. surged 7.5 percent, the most since Oct. 28, to C$52.63 after winning an agreement the parties valued at more than $280 million to service Intelsat SA satellites.

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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