Canadian Stocks Fall on Economic Concerns, Gold Shares Rise

Canadian stocks declined for the fourth time in five days, led by banks, after the European Central Bank said economic risks intensified and U.S. jobless claims increased.

Toronto-Dominion Bank (TD), Canada’s second-largest lender by assets, fell 1.7 percent after saying it will sell 8 million shares at C$76.50 a share. Transat A.T. Inc., Canada’s largest tour operator, slumped 9.3 percent after forecasting fourth- quarter results would be “inferior” to last year. Barrick Gold Corp. (ABX) climbed 1.7 percent, as the price of the metal rebounded from a two-day slump on demand for a haven.

The Standard & Poor’s/TSX Composite Index fell 36.60 points, or 0.3 percent, to 12,683.96 at 4 p.m. in Toronto, after rising as much as 0.2 percent earlier today.

“We’re at risk of considerable disappointment on the economic front in Canada just because of what’s going on all around us,” Danielle Park, a partner at Venable Park Investment Counsel Inc. in Barrie, Ontario, said in a telephone interview. Venable manages at least C$1 million ($1.02 million) each for more than 250 families. “Gold’s been in a big bull run, and the Canadian gold companies actually had a bit of a breakout last week, which is potentially bullish for gold mining companies.”

The S&P/TSX has fallen 0.7 percent this month and 5.7 percent for the year. In the past week, the U.S. reported employment didn’t increase in August and German Chancellor Angela Merkel’s party was defeated in a state election as she failed to sway voters with a campaign based on her handling of the euro-area debt crisis.

Threats Worsen

ECB officials meeting in Frankfurt today kept the benchmark interest rate at 1.5 percent, while saying risks to the economic recovery have intensified. ECB President Jean-Claude Trichet said threats to the euro region have worsened and inflation risks have eased, giving officials the option to take further action should the debt crisis worsen.

U.S. claims for unemployment benefits rose by 2,000 to 414,000 in the week ended Sept. 3, the Labor Department said. Economists surveyed by Bloomberg News projected a drop in claims to 405,000, according to the median forecast.

President Barack Obama is scheduled to speak tonight to a joint session of Congress on his package to spark more job growth. His $300 billion plan includes an extension of a payroll tax cut for workers, which expires at the end of this year, and also would reduce the portion of the payroll tax paid by employers.

Bernanke’s Statement

Federal Reserve Chairman Ben S. Bernanke said today policy makers will discuss the tools they could use to boost the recovery at their next meeting this month and stand ready to use them if necessary.

Barrick rallied 1.7 percent to C$54.61 as the precious metal climbed 2.2 percent in New York after a two-day decline of 3.2 percent. Goldcorp Inc. (G) advanced 1.6 percent to C$55.30, while Yamana Gold Inc. (YRI) rallied 4.5 percent to C$17.20. A group of Canadian gold companies climbed to its highest level since at least January 1988.

Toronto-Dominion dropped 1.7 percent to C$76.31, leading an index of banking shares on its fourth decline in five days. Bank of Nova Scotia (BNS) declined 0.8 percent to C$52.81. Bank of Montreal (BMO) dropped 1.2 percent to C$59.63.

NovaGold Resources Inc. (NG), which is developing gold and base- metals properties in Alaska and British Columbia, had its share- price estimate lowered to C$10.50 from C$10.75 at National Bank Financial Inc., which said the company’s “financing needs continue to increase.” The shares slid 10 percent to C$9.44, for the biggest decline in the benchmark equity index.

Revenue Miss

Transat, based in Montreal, lost the second-most, slipping 9.3 percent to C$7.25. In addition to its fourth-quarter outlook, the company’s third-quarter revenue fell short of analyst projections, Bloomberg data show.

Primero Mining Corp. (P), the precious-metals producer based in Vancouver, plunged 14 percent to C$3.07. The company cut its forecast for gold production, citing a monthlong strike and lower-than-estimated gold grades.

The Canadian benchmark equity index is trading at 16.3 times reported earnings, about 24 percent higher than the S&P 500 in the U.S., and about 9.5 percent less than its 2011 average of 18, before today, data compiled by Bloomberg show.

To contact the reporter responsible for this story: Whitney Kisling in New York at wkisling@bloomberg.net

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

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