Canadian Stocks Decline as Wheat Futures Retreat; BCE Advances

Canadian stocks fell for a third day, led by raw-materials producers, as China raised banks’ reserve requirement for the fifth time this year and wheat futures declined.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, dropped 2.1 percent a day after the U.S. Agriculture Department forecast higher supplies than most analysts had estimated. Eastern Platinum Ltd. (ELR), which mines in South Africa, plunged 13 percent after saying striking workers sabotaged equipment. BCE Inc. (BCE), Canada’s largest phone company, rose 2.6 percent after beating analysts’ average profit estimate.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 30.32 points, or 0.2 percent, to 13,389.42.

“Some disappointing economic data, coupled with commodity volatility, has essentially created some risk aversion,” said Youssef Zohny, a money manager at Van Arbor Asset Management Ltd. in Vancouver, which oversees C$50 million ($52 million).

The S&P/TSX dropped 4.9 percent this quarter through yesterday after surging 62 percent in the prior two years. Gold has declined from a record and oil from a 31-month high this month as the U.S. Dollar Index has rebounded after five months of losses. The U.S. currency gained on speculation the European Central Bank will be slower than previously forecast to raise interest rates and that Greece may need to restructure its debt.

China’s central bank raised reserve requirements to a record 21 percent, effective May 18. The U.S. today reported more initial jobless claims from last week than most economists in a Bloomberg survey had forecast.

Thirty percent of investors in a Bloomberg Global Poll released today said they intend to reduce commodity holdings.

Fertilizer Shares

Fertilizer producers dropped as wheat declined. Potash Corp. lost 2.1 percent to C$49.17. Agrium Inc. (AGU), Canada’s second-largest fertilizer producer, slumped 2.4 percent to seven-month low of C$76.31.

Uranium producers retreated as nuclear regulators met in Europe and the U.S. to discuss power-plant safety. Cameco Corp. (CCO), the world’s largest producer of the nuclear fuel, decreased 4.9 percent to C$25.37, the lowest price since August. Uranium One Inc., a producer controlled by Moscow-based ARMZ uranium holding, fell 7.6 percent to C$3.65.

Silver fell 2 percent, extending its monthly tumble to 28 percent. Gold dropped in electronic trading.

Barrick Gold Corp. (ABX), the world’s largest gold producer, slipped 0.9 percent to a nine-month low of C$43.44. Eldorado Gold Corp. (ELD), which mines in China and Turkey, retreated 1.5 percent to C$14.72.

Sherritt International Corp. (S), which produces coal and industrial metals, rallied 6.1 percent from an eight-month low to C$7.49 as base metals advanced.

Crocodile River Mine

Eastplats plunged 13 percent to 90 Canadian cents, the lowest closing price since July. The company said it has suspended operations at its Crocodile River Mine after members of the National Union of Mineworkers damaged electrical, pumping and ventilation systems.

Lesiba Seshoka, a National Union of Mineworkers spokeswoman, said by phone that the union is unaware of any property damage at the mine.

Tim Hortons Inc. (THI), Canada’s largest fast-food chain, dropped 4.5 percent, the most since November 2008, to C$45.70 after its first-quarter profit trailed the average of 12 analyst estimates by 6.4 percent, excluding certain items.

Finning, BCE

Finning International Inc. (FTT), BCE and Linamar Corp. (LNR) rallied after their earnings beat their average analyst estimates.

Finning, which says it is the world’s largest Caterpillar dealer, soared 8.5 percent to C$28.08, ending a seven-day streak of losses. BCE, Canada’s biggest phone company, increased 2.6 percent to a 29-month high of C$37.89 after raising its 2011 profit forecast. Linamar, the country’s second-largest auto-parts maker, climbed 5.9 percent to C$21.71.

Nevsun Resources Ltd. (NSU), which mines precious and base metals in Africa, rallied 8.3 percent to C$5.36 after Rahul Paul, an analyst at Canaccord Financial Inc., raised his rating on the shares to “speculative buy” from “hold.” In a note to clients, Paul said Nevsun’s first-quarter financial results “demonstrate a smooth ramp-up” of its Bisha mine.

-- With assistance from Mkhululi Mancotywa in Johannesburg. Editors: Joanna Ossinger, Stephen Kleege

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.