Canadian Stocks Retreat on Declines in Crude Oil, Base Metals

Canadian stocks fell for a second day as commodity producers dropped with world equities on concern Greece won’t be able to meet conditions for its next aid payment.

Canadian Natural Resources Ltd. (CNQ), Canada’s second-largest energy company by market value, declined 2.1 percent as crude futures slid 2.6 percent. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, slumped 8.4 percent as the metal slipped to the lowest price since November. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by value, dropped 2.1 percent as agricultural futures retreated.

The Standard & Poor’s/TSX Composite Index decreased 91.67 points, or 0.8 percent, to 12,172.04.

“It’s Groundhog Day all over again,” Gerry Brockelsby, a money manager at Marquest Asset Management Inc. in Toronto, said in a telephone interview. The firm oversees C$250 million ($252 million). “It’s the same story: the continuing difficulties in Europe and particularly the Greece situation. It’s also the ramification any problems with the Greece deal would have in other countries in similar positions. It’s a contagion problem.”

The S&P/TSX has fallen 4.7 percent this month and is set to drop for a seventh-straight month, the longest streak since 1984. Banks and energy producers have declined as Greek bond yields surged on speculation the country will default. All 24 major developed-market stock benchmarks have retreated this year.

European Teleconference

Greek bond yields rose today before European Union, International Monetary Fund and Greek officials held a teleconference to judge whether the country remains eligible for the payment due next month. The call was “productive and substantive,” the Greek Finance Ministry said in an e-mailed statement. The U.S. dollar advanced against 15 of 16 other major currencies.

Crude fell to a three-week low after Abdalla El-Badri, the secretary-general of the Organization of Petroleum Exporting Countries, said demand for oil is rising less than expected.

Talisman Energy Inc. (TLM), an oil and gas producer with operations in North America, the North Sea and Indonesia, decreased 2.8 percent to C$13.90 after closing at the lowest since April 2009 on Sept. 16. Encana Corp. (ECA), Canada’s largest natural gas producer, lost 2.5 percent to C$22.70.

Canadian Natural retreated 2.1 percent to C$33.48 after Amir Arif, an analyst at Stifel Financial Corp., cut his rating on the shares to “hold” from “buy.” In a note to clients, Arif cited lower oil-price forecasts for next year.

China Concern

Copper futures fell the most since in 10 months in New York after China said new-home prices advanced in all 70 cities it monitors in August, raising concern the country will take further steps to control inflation.

Teck Resources Ltd. (TCK/B), Canada’s largest base-metals and coal producer, sank 3.6 percent to C$37.69. First Quantum slumped 8.4 percent to C$19.41, the lowest close since November. Lundin Mining Corp. (LUN), which mines base metals in Europe, decreased 5.8 percent to C$4.73.

Potash Corp. retreated 2.1 percent to C$53.37 as wheat futures fell to the lowest since July 12 after Spain raised its forecast for the country’s harvest.

Grayd Resource Corp. (GYD), which explores for gold in Mexico, soared 41 percent to C$2.75, the highest since at least 1989, after agreeing to be bought by Agnico-Eagle Mines Ltd. (AEM) for C$2.80 a share in cash and stock.

Analyst Upgrade

Saputo Inc. (SAP), Canada’s largest food producer, surged 4.7 percent, the most since October, to C$39.46 after Irene Nattel, an analyst at Royal Bank, raised her rating on the shares to “outperform” from “sector perform.” The shares cost less relative to forecast earnings than they have historically, Nattel wrote in a note to clients.

Finning International Inc. (FTT), the world’s biggest Caterpillar dealer, sank 6.1 percent to C$21.86 after Cherilyn Radbourne, an analyst at TD, cut her rating on the company to “hold” from “buy.” In a note to clients, Radbourne cited the company’s difficulties obtaining parts for its Canadian operations.

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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