Canadian Stocks Retreat as Precious-Metal Future Prices Decline

Canadian stocks fell for a third day, led by raw-materials producers, as gold and silver dropped after the euro gained, eroding demand for precious metals as a haven.

Barrick Gold Corp. (ABX), the world’s largest producer of the metal, declined 2.2 percent as gold lost 0.7 percent. Sino- Forest Corp., a forestry company with operations in China, plunged 21 percent after a short seller said it overstated timberland holdings and production. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, rose 1.5 percent as corn and wheat gained.

The Standard & Poor’s/TSX Composite Index slipped 8.38 points, or 0.1 percent, to 13,519.50.

“People have been going to gold not for investment purposes but more as a currency,” said Robert “Hap” Sneddon, president of Oakville, Ontario, money manager CastleMoore Inc. and vice president of the Canadian Society of Technical Analysts. “You get the euro strengthening a little bit, and it’s probably going to come at the expense of gold.”

The S&P/TSX slumped 2 percent yesterday, the most since August, after private reports indicated slowing employment and manufacturing growth in the U.S. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.

An index of S&P/TSX gold stocks fell the most in three weeks as demand for a safe haven weakened. The metal advanced 8.6 percent this year through yesterday as investors speculated European countries will have difficulty managing their debt crisis.

Barrick, Goldcorp

Barrick dropped 2.2 percent to C$45.06. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, declined 1.2 percent to C$47.58. Silver Wheaton Corp. (SLW), Canada’s fourth- biggest precious-metals company by market value, lost 2.1 percent to C$34.36 as silver sank 4 percent.

Sino-Forest tumbled 21 percent, the most since 1995, to C$14.46 before being halted. Carson C. Block, a Hong Kong-based analyst who has bet against Sino-Forest shares, said in a report that the amount of land the company reported buying from Lincang City in Yunnan province doesn’t match city records.

Dave Horsley, chief financial officer at Sino-Forest, didn’t immediately return calls to his mobile phone and the company’s Mississauga, Ontario office. No one immediately replied to voicemail messages left at Sino-Forest’s Hong Kong and Mississauga offices.

Potash, Agrium Rise

Fertilizer producers climbed as wheat futures rose on speculation Russian exports won’t be enough to help meet higher global demand and corn gained. Potash Corp. increased 1.5 percent to C$54.19. Agrium Inc. (AGU), Canada’s second-largset fertilizer producer, advanced 1.8 percent to C$84.81.

Oilfield-services company Trinidad Drilling Ltd. (TDG) plunged 5.3 percent to C$9.74 a day after sinking 6 percent. Yesterday, the company reported earnings that missed the average analyst estimate by 7.2 percent, excluding certain items. At least three analysts cut their ratings on the shares today.

Transat A.T. Inc., the owner of airline Air Transat, slumped 7.9 percent to C$11.78 after Claude Proulx, an analyst at Bank of Montreal, reduced his rating on the shares to “market perform” from “outperform.” In a note to clients, Proulx wrote that second-quarter earnings may decline in the second half of the fiscal year due to excess capacity and competition from Air Canada.

Valeant Pharmaceuticals International Inc. (VRX), Canada’s largest drugmaker, rallied 4.1 percent to C$51.29 as company executives met with potential investors in New York.

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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