Canadian Stocks Fall as U.S. Dollar Gains, Oil, Metals Decline

Canadian stocks fell, erasing a weekly gain, as mounting concern over the possibility of a Greek default boosted the U.S. dollar and weakened fuels, metals and shares of financial companies.

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, dropped 3.2 percent as crude oil declined. Royal Bank of Canada (RY), the country’s largest lender by assets, decreased 3 percent. BlackBerry maker Research In Motion Ltd. (RIM) lost 4.7 percent after an analyst at Jefferies Group Inc. cut his rating on the company.

The Standard & Poor’s/TSX Composite Index fell 296.42 points, or 2.3 percent, to 12,387.54. The index dropped 1.7 percent for the week.

“The situation in Europe is not getting better,” Stephen Gauthier, a money manager at Fin-XO Securities in Montreal, said in a telephone interview. The firm oversees C$600 million ($602 million). “Oil and gas is quite a big sector, so if you continue to see oil being affected by what’s happening around the world, it’s not great news for the Canadian market.”

The S&P/TSX has retreated 6.9 percent this quarter, second- least among developed countries’ stock benchmarks behind New Zealand’s. Energy stocks in the Canadian index have sunk 13 percent and gold companies have surged 23 percent on concern over sovereign debt in Europe and the U.S. and a slowing global recovery.

Canadian Employment

Canadian employment declined by 5,500 positions in August, Statistics Canada said today. Twenty of 22 economists in a Bloomberg survey had forecast a gain in jobs. The unemployment rate climbed to 7.3 percent from 7.2 percent, the first increase since January.

Fuels and metals fell as the U.S. dollar gained against 15 of 16 other major currencies. The euro dropped as much as 1.8 percent, a day after the European Central Bank cut its 2011 and 2012 growth forecasts.

The ECB said today that Juergen Stark resigned from its executive board, suggesting policy makers are divided over how to fight the debt crisis. Stocks extended their declines after three German officials said Chancellor Angela Merkel’s government is preparing plans to shore up banks in the event that Greece defaults.

The S&P/TSX Energy Index completed its biggest loss in three weeks.

Suncor declined 3.2 percent to C$29.45. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, decreased 4.4 percent to C$34.15. Cenovus Energy Inc. (CVE), the country’s fifth-biggest company in the industry, slid 6.4 percent to C$31.78, the lowest close since January. Precision Drilling Corp. (PD), Canada’s largest drilling company, sank 7.3 percent to C$11.85.

Banks, Insurers

Forty-one of 43 S&P/TSX financial companies retreated. Royal Bank of lost 3 percent to C$47.47. Manulife Financial Corp. (MFC), North America’s fourth-largest insurer, lost 4.2 percent to a one-year low of C$12.32. Toronto-Dominion Bank (TD), Canada’s second-biggest lender by assets, fell 2.7 percent to C$74.22.

The S&P/TSX Gold Index dropped for the first time in six days after closing at a record yesterday. Yamana Gold Inc., Canada’s fourth-largest producer of the metal by market value, declined 1.7 percent to C$16.90. Northgate Minerals Corp. (NGX), the mining company that has agreed to be bought by AuRico Gold Inc., slumped 7.7 percent from a four-year high to C$3.98.

Harry Winston Diamond Corp. (HW), the co-owner of the Diavik mine featured on the TV show “Ice Road Truckers,” sank 6 percent to C$13.52 in the second trading day after reporting earnings that trailed the average analyst estimate in a Bloomberg survey, excluding certain items.

Copper futures retreated the most in a month in New York. Teck Resources Ltd. (TCK/B), Canada’s largest base-metals and coal producer, slipped 4.6 percent to C$40.58. First Quantum Minerals Ltd. (FM), the country’s second-biggest publicly traded copper producer, fell 6.4 percent to C$20.81.

RIM lost 4.7 percent to C$29.52 after Peter Misek, a Jefferies analyst, reduced his rating on the shares to “underperform” from “hold.” A Jefferies survey found “lackluster” retail sales of new BlackBerry phones, Misek wrote in a note to clients.

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 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.