Canadian Stocks Decline as U.S. Fed Reduces Growth Forecasts
Canadian stocks fell for the first time in three days after the U.S. Federal Reserve cut its growth forecasts and corn, wheat and copper futures dropped.
Bank of Montreal (BMO), Canada’s fourth-largest lender by assets, declined 1.5 percent after the Fed lowered its 2011 forecast for gross domestic product increase by 0.4 percentage points. Barrick Gold Corp. (ABX), the world’s largest producer of the metal, gained 1.4 percent as gold futures rose for a seventh day. Bombardier Inc. (BBD/B), a maker of trains and airplanes, fell 4.8 percent after rival Airbus SAS won an order for 80 single-aisle aircraft from Republic Airways Holding Inc.
The Standard & Poor’s/TSX Composite Index slipped 2.76 points, or less than 0.1 percent, to 13,060.56.
“The market’s still pretty edgy,” said Irwin Michael, a money manager at ABC Group of Funds in Toronto, which oversees about C$1 billion ($1.03 billion). “I don’t know whether people expected an extension of QE2,” the second round of asset purchases begun in November.
The stock benchmark rallied 2.1 percent June 20 and yesterday for the biggest two-day gain in seven months as Greek Prime Minister George Papandreou won support for a Cabinet shuffle. The S&P/TSX tumbled 10 percent from April 5 to June 17 as world equities retreated on concern a Greek debt default will derail the global recovery.
The U.S. central bank today cut its 2011 and 2012 economic- growth forecasts and said it will complete its $600 billion bond-purchase program this month as scheduled.
Canada’s four largest banks and three biggest insurers each fell. BMO dropped 1.5 percent to C$60.20. Manulife Financial Corp. (MFC), North America’s fourth-largest insurer, declined 1.3 percent to C$16.19. Great-West Lifeco Inc. (GWO), the country’s second-biggest insurer, slipped 0.9 percent to C$25.19.
Fertilizer producers retreated as corn and wheat futures decreased at least 4.2 percent on speculation more-favorable weather will help crops in the U.S. and Europe.
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, lost 2 percent to C$51.34. Agrium Inc. (AGU) decreased 1.7 percent to C$81.46.
Teck Resources Ltd., Canada’s largest base-metals and coal producer, dropped 2.8 percent to C$44.18 after jumping 5.2 percent yesterday. Copper declined 0.7 percent today in New York after Beijing Antaike Information Development Co., a researcher owned by the Chinese government, said the country’s copper imports may plunge 32 percent this year.
The cost of insuring against default on European government and bank debt rose today, reflecting concern the confidence vote does not guarantee the passage of austerity measures in Greece. The euro fell against 14 of 16 other major currencies.
Gold futures gained 0.5 percent to settle at a seven-week high.
Barrick increased 1.4 percent to C$43.57. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, climbed 2.2 percent to C$48.20. Eldorado Gold Corp. (ELD), which mines in Turkey and Greece, jumped 5.4 percent to C$14.43. Great Basin Gold Ltd. (GBG) soared 10 percent, the most in nine months, to C$2.01.
Bombardier, the world’s third-largest maker of civil aircraft, lost 4.8 percent to C$6.69 after Republic, the parent of Frontier Airlines, agreed to buy the 80 Airbus planes, which have a combined value of $7 billion at list prices. Republic ordered 40 CSeries airplanes from Bombardier last year.
Sino-Forest Corp. (TRE), the forestry company battling a short seller’s assertion of financial manipulation, rose 51 percent to C$3 after plunging 27 percent to an eight-year low yesterday. Shares of the company, which operates in China, sank 89 percent from June 1 to yesterday after Muddy Waters LLC said its stated land holdings don’t match city records.
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