Canadian Stocks Fall as Mining Shares Decline; Gabriel Surges

Canadian stocks dropped for the first time in three days as energy and raw-materials producers fell on speculation the U.S. is unlikely to restart stimulus policies immediately.

Copper producer First Quantum Minerals Ltd. (FM) lost 3.1 percent after receiving a “reduce” rating from an analyst at Arbuthnot Banking Group Plc. Gabriel Resources Ltd. (GBU), which is developing a gold and silver mine in Romania, surged 9.3 percent after getting government approval of its archaeological review. BlackBerry maker Research In Motion Ltd. retreated 3.3 percent after an analyst at Needham & Co. cut his profit estimates for the company.

The Standard & Poor’s/TSX Composite Index slipped 72.02 points, or 0.5 percent, to 13,252.92. The index had advanced 0.6 percent before U.S. Federal Reserve Chairman Ben S. Bernanke said the central bank won’t soon begin a third round of bond purchases, a strategy known as quantitative easing.

“Some people were paying attention to Bernanke’s comments yesterday that he was ready to ease monetary policy if the economy did slow,” Jeff Bradacs, senior investment analyst on a Manulife Asset Management team that oversees about C$1.7 billion ($1.8 billion), said in a telephone interview. “People were expecting QE3 from those comments, and now not.”

The S&P/TSX gained 0.7 percent yesterday as Bernanke told a Congressional committee the bank might renew stimulus policies if the economy stalls.

Record Gold

Speculation that the Fed might return to stimulus policies helped propel gold futures to a record high yesterday. The S&P/TSX Materials Index rallied 6 percent this month through yesterday as gold advanced 5.5 percent. Precious-metals companies make up 13 percent of Canadian stocks by market value, according to Bloomberg data.

Bernanke told a U.S. Senate committee today that higher inflation will discourage the central bank from restarting quantitative easing quickly.

“We’re not prepared at this point to take further action,” he said.

Precious-metals producers fell as gold fluctuated after seven days of gains. Barrick Gold Corp. (ABX), the world’s largest gold producer, decreased 1.3 percent to C$46.01. Agnico-Eagle Mines Ltd. (AEM), Canada’s fourth-biggest company in the industry by market value, slipped 1.4 percent to C$62.07. Extorre Gold Mines Ltd. (XG), which explores in Argentina, slumped a record 14 percent to C$12.57 after Michael Gray, an analyst at Macquarie Group Ltd., cut his rating on it to “neutral” from “outperform.”

Archaeological Permit

Gabriel Resources Ltd., which is developing a gold and silver mine in Romania, soared 9.3 percent, the most since November, to C$8 after saying the country’s government has signed off on the company’s archaeological review of historic mining activity on the site.

Base-metals companies fell as copper and zinc futures dropped. Teck Resources Ltd. (TCK/B), Canada’s largest producer of industrial metals and coal, declined 2.1 percent to C$48.70. HudBay Minerals, Inc., which mines copper and zinc in Canada, lost 2.3 percent to C$14.59.

First Quantum decreased 3.1 percent to C$131.21 after Gavin Wood, an analyst at Arbuthnot in London, set a 12-month price estimate for its U.K.-traded shares 14 percent below their closing price yesterday.

In a note to clients, Wood cited the shares’ performance since 2009 -- they gained four times as much as the FTSE 300 Mining Index through yesterday -- and the chance they may slump if copper retreats or new mines are delayed.

Oil Producers

Energy stocks declined as crude oil futures retreated the most in three weeks in New York. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, lost 1.2 percent to C$37.60. Talisman Energy Inc., which operates in North America, the North Sea and Indonesia, decreased 2.1 percent to C$18.05.

The S&P/TSX Insurance Index slumped to the lowest level since June 17. Manulife Financial Corp. (MFC), North America’s fourth- biggest insurer, lost 1.1 percent to C$16.03. Sun Life Financial Inc. (SLF), Canada’s No. 3 insurer, fell for a seventh day, slipping 2 percent to an eight-month low of C$27.54 in Toronto Stock Exchange trading.

RIM declined 3.3 percent to C$26.18 after Charlie Wolf, an analyst at Needham & Co., cut his 2012 and 2013 profit estimates on the company. Unless the company improves its sales in the consumer market, “RIM is likely to become a shadow of its former self,” Wolf wrote in a note to clients.

Gildan Activewear Inc. (GIL), Canada’s largest apparel maker, sank 4.6 percent, the most in seven months, to C$32.91. In a note to clients, Kenneth M. Stumphauzer, an analyst at Sterne Agee Group Inc., said his firm’s surveys indicate Gildan’s wholesale sales volumes dropped more than 10 percent in June.

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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