Canadian Stocks Decline as Trichet Warns of Risks to Stability

Canadian stocks fell for a second day after European Central Bank President Jean-Claude Trichet said the continent is at a “red” level of risk and the U.S. reported an increase in initial jobless claims.

Nexen Inc. (NXY), an oil and gas producer with operations on five continents, dropped 2.1 percent as crude futures slumped to a four-month low. Toronto-Dominion Bank (TD), Canada’s second-largest lender by assets, lost 1.5 percent as world financial stocks retreated. Barrick Gold Corp. (ABX), the world’s biggest gold-mining company, declined 1.4 percent as the U.S. dollar rose against 14 of 16 other major currencies.

The Standard & Poor’s/TSX Composite Index decreased 80.98 points, or 0.6 percent, to 12,979.58. The index had rallied 2.1 percent on June 20 and June 21 on speculation Greece will pass austerity measures to address its debt crisis.

“You get these momentary distractions, like we’ve figured out a solution, then the next day you realize, ‘Oh darn, there isn’t a Santa Claus,’” said Danielle Park, a partner at Venable Park Investment Counsel Inc. in Barrie, Ontario, which manages at least C$1 million ($1.02 million) each for more than 250 families. “We’re piled to the outer solar system in debt, and banks are full of all these bad bonds.”

The stock benchmark fell 7.5 percent this quarter through yesterday as concern that Greece will default on its debts mounted and data on employment and manufacturing in the U.S. indicated a slowdown in the economic recovery. The S&P/TSX hasn’t ended a quarter with a drop of more than 6.2 percent since 2008.

‘Red’ Signal

When asked yesterday the level of the European Systemic Risk Board’s planned risk “dashboard,” board chairman Trichet said “red.”

“The message of the board is that” the link between debt problems and banks “is the most serious threat to financial stability in the European Union,” Trichet said after a board meeting in Frankfurt.

First-time unemployment claims in the U.S. climbed to 429,000 last week from 420,000 the week before, the Labor Department said today in Washington. None of the 47 economists in a Bloomberg survey had forecast a reading that high.

The Thomson Reuters/Jefferies CRB Commodity Price Index declined to the lowest level since January as 16 of 19 commodities in the index retreated. Crude oil sank 4.6 percent in New York.

Suncor, Canadian Natural

Nexen lost 2.1 percent to a nine-month low of C$19.89. Talisman Energy Inc. (TLM), an oil and gas producer with operations in North America, the North Sea and Indonesia, decreased 2.1 percent to C$18.53.

Husky Energy Inc. (HSE), Canada’s third-largest energy company by revenue, plunged 5.7 percent, the most in two years, to C$26.55 after saying it will sell shares at C$27.05 each.

Every S&P/TSX bank and all but one insurer retreated. TD fell 1.5 percent to C$78.50. Royal Bank of Canada (RY), its larger rival, dropped 1.3 percent to C$53.82. Manulife Financial Corp. (MFC), North America’s fourth-biggest insurer, declined 1.2 percent to C$16.

The U.S. dollar gained as much as 1.6 percent against the euro after Markit Economics’s composite index of euro-area purchasing managers’ surveys trailed all 16 estimates in a Bloomberg survey.

Gold futures fell the most since May 5, ending a seven-day streak of gains, and silver slumped 4.7 percent. Barrick dropped 1.4 percent to C$42.98. Goldcorp Inc. (G), the world’s second- largest gold producer, slipped 1.3 percent to C$47.59. European Goldfields Ltd. (EGU), which is developing precious- and base-metal projects, declined 6.4 percent to C$9.24.

Smartphone Survey

BlackBerry maker Research In Motion Ltd. (RIM) increased 5.5 percent to C$29.14. RIM’s smartphones are less likely than competitors’ to develop hardware problems, WDS, a Poole, England-based company that tracks customer-support calls, said in a statement today.

RIM shares remain down 50 percent for the year.

Teck Resources Ltd. (TCK/B), the country’s biggest base-metals and coal producer, climbed 3.1 percent to C$45.54. The company said it may buy back up to 40 million shares over the next year.

TMX Group Inc. (X), the owner of the Toronto Stock Exchange, advanced for a fifth day, rallying 2.4 percent to a three-year high of C$45.30. Maple Group Acquisition Corp. raised its unsolicited bid for the company to C$50 a share from C$48 a share.

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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