Canada Stocks Fall as European Economic Growth Trails Forecasts

Canadian stocks fell for the first time in six days, led by energy producers and banks, after the European Union reported a bigger slowdown in economic growth than most economists had forecast and U.S. homebuilding dropped.

Canadian Natural Resources Ltd. (CNQ), the country’s second- largest energy company by market value, declined 2 percent as crude oil lost as much as 2.6 percent. Toronto-Dominion Bank (TD), Canada’s second-biggest lender by assets, slipped 0.8 percent after an analyst at Macquarie Group Ltd. cut his rating on the shares. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, decreased 5 percent as the metal slumped in New York.

The Standard & Poor’s/TSX Composite Index decreased 92.41 points, or 0.7 percent, to 12,591.20 at 10:43 a.m. in Toronto.

“The economic stats, they haven’t given us anything to get excited about,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($1 billion). “It’s certainly causing investors to pause a bit.”

The S&P/TSX surged 8.7 percent in the five days ending yesterday, the most since the beginning of the bull market in March 2009, as the U.S. reported a decline in initial jobless claims and a gain in retail sales. Crude oil jumped after sinking to a 10-month low, boosting energy stocks, the second- biggest part of the index.

European GDP

Gross domestic product in the 17 countries that use the euro rose 0.2 percent in the second quarter, the EU’s statistics office said, trailing most economists’ forecasts in a Bloomberg survey. Germany’s economy grew 0.1 percent, less than all 33 estimates.

U.S. housing starts fell to a 604,000 annual rate in July, down from a revised 613,000 in June, the Commerce Department said today in Washington. Building permits totaled 597,000, compared with a median forecast of 605,000 in a Bloomberg survey of economists.

In Canada, manufacturing sales dropped in June for a third month, Statistics Canada said today. The decline exceeded all 19 forecasts in a Bloomberg survey.

Sixty-four of 67 S&P/TSX energy companies declined. Canadian Natural lost 2 percent to C$36.16. Suncor Energy Inc. (SU), Canada’s biggest oil and gas producer, decreased 1.8 percent to C$31.84. Cenovus Energy Inc. (CVE), the country’s fifth-largest energy company, retreated 1.3 percent to C$35.48.

Ivanhoe Energy

Ivanhoe Energy Inc. (IE), an oil-sands developer with operations in Canada and Ecuador, surged 8 percent to C$1.76 after saying its Sunwing Energy Ltd. unit drilled its first exploration well in Mongolia. Shares of the Vancouver-based company have soared 25 percent in two days, the most since 2009.

The country’s eight largest banks and three biggest insurers each fell after Sumit Malhotra, an analyst at Macquarie, said in a note to clients that banks’ 2012 earnings are likely to trail most other analysts’ estimates.

TD dropped 0.8 percent to C$76.23 after Malhotra cut his rating on the stock to “neutral” from “outperform.” Royal Bank of Canada (RY), its larger rival, declined 1.2 percent to C$51.01. Bank of Nova Scotia (BNS), Canada’s third-largest lender by assets, slipped 0.9 percent to C$53.19.

Base-metals and coal producers retreated as copper futures lost as much as 2 percent in New York.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, decreased 5 percent to C$23.36. Teck Resources Ltd. (TCK/B), the country’s biggest company in the industry, slipped 2 percent to C$42.90. Lundin Mining Corp. (LUN), which produces base metals in Europe, sank 5.2 percent to C$5.49.

Grande Cache Coal Corp. (GCE), which mines in Alberta, slumped 8.2 percent to C$6.70 after reporting first-quarter profit that missed the average estimate of analysts in a Bloomberg survey by 37 percent, excluding certain items.

Sino-Forest Corp. (TRE), the forestry company fighting a short seller’s assertions of financial manipulation, tumbled for a second day after saying the independent investigation it initiated into the assertions will take until the end of the year. The shares plunged 11 percent to C$5.39 after retreating 8.4 percent yesterday.

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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.