Canadian Stocks Fall as Oil, Base Metals Drop on U.S. Jobs Data

Canadian stocks fell, trimming a weekly gain, as oil and base-metals prices slipped after the U.S. reported an increase in its unemployment rate.

Teck Resources Ltd. (TCK/B), Canada’s largest base-metals and coal producer, dropped 1.6 percent after the U.S. Labor Department said non-farm employment increased last month by the least since September. Canadian Natural Resources Ltd. (CNQ), Canada’s second- biggest energy company by market value, declined 3.1 percent as crude oil lost the most in two weeks. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 2.6 percent as corn and wheat gained.

The Standard & Poor’s/TSX Composite Index decreased 34.3 points, or 0.3 percent, to 13,371.70, reducing its weekly advance to 0.5 percent.

The jobs data “put a real damper on the market,” said David Cockfield, senior vice president and managing director at Northland Wealth Management in Toronto, which oversees C$200 million ($208 million). “People were expecting better. There were various excuses for previous bad numbers -- Japan, bad weather -- and those excuses are starting to run off.”

The S&P/TSX rose seven of the previous eight days as European leaders took action to prevent a Greek default and a gauge of U.S. manufacturing surpassed economists’ forecasts. The index slumped 5 percent from the end of March as U.S. unemployment increased in April and May. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.

Unemployment Climbs

U.S. payrolls rose by 18,000 in June, less than all 85 economist estimates in a Bloomberg survey. The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent.

Unemployment in Canada was unchanged at 7.4 percent, the lowest since January 2009.

Crude oil futures retreated 2.5 percent after the release of the U.S. jobs report. Canadian Oil Stands Ltd., the largest owner of the Syncrude project, decreased 1 percent to C$28.01. Bonavista Energy Corp., a western Canadian energy producer, fell 3.2 percent to C$28.15.

Canadian Natural slumped 3.1 percent to C$40.36 after Thomas R. Driscoll, an analyst at Barclays Plc, cut his rating on the shares to “equal weight” from “overweight.” About 70 percent of the company’s capital spending “may be devoted to assets with unexciting rates of return,” Driscoll said in a note to clients.

All major base metals traded on the London Metal Exchange dropped, with copper declining from a 10-week high. Teck lost 1.6 percent to C$50.15. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, decreased 2.2 percent to C$136.20.

Hot Weather

Corn rose 3.5 percent, extending the first weekly gain since May, as forecasts for hot, dry weather in the U.S. Midwest led to concern crops may suffer. Wheat advanced 2.6 percent.

Potash Corp. increased 2.6 percent to C$56.89. Agrium Inc. (AGU), Canada’s second-largest fertilizer producer, climbed 1.5 percent to C$86.30. Viterra Inc. (VT), Canada’s biggest grain handler, rose 1.9 percent to C$10.92.

European Goldfields Ltd. (EGU), which is developing mines in Europe, surged 11 percent to C$13.65 after receiving environmental approval for its projects in Greece. Shares of the Whitehorse, Yukon-based company soared 35 percent this week, the most since 2003.

Directory publisher Yellow Media Inc. (YLO) tumbled 11 percent to C$2.40 after Scott Cuthbertson, an analyst at Toronto-Dominion Bank, cut his rating on the shares to “reduce” from “hold.”

In a note to clients, Cuthbertson cited “accelerating deterioration in the fundamentals of the core business” and “mounting concerns about the balance sheet and continuation of the dividend.”

Yellow Media shares have plunged 61 percent this year, stretching its dividend yield to 30 percent.

To contact the reporter on this story: Matt Walcoff at Mwalcoff1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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