Canadian Stocks Retreat as Greek Politics Threaten Bailout Plan

Canadian stocks fell a second day after a Chinese factory index dropped and concern mounted that Greek politics will make it harder for the country to avoid default.

Royal Bank of Canada (RY), the country’s biggest lender by assets, retreated 3.3 percent as financial stocks fell for a third day. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, lost 2.6 percent as crude futures decreased the most intraday in a month. Teck Resources Ltd. (TCK/B), the country’s biggest base-metals and coal producer, slumped 4.7 percent after China’s Purchasing Managers’ Index trailed all 16 economist forecasts in a Bloomberg survey.

The Standard & Poor’s/TSX Composite Index dropped 136.96 points, or 1.1 percent, to 12,115.10 after the biggest drop in almost a month yesterday.

“The debt crisis appears to be widening,” Robert McWhirter, a money manager at Selective Asset Management Inc. in Toronto, said in a telephone interview. McWhirter oversees about C$140 million ($138 million). “It has always been, ‘Let’s try to get Greece fixed up and put a firewall around the other countries.’ People seem to be having doubts that is going to be the case.”

The S&P/TSX increased 5.4 percent in October, the biggest monthly gain since May 2009, after seven straight months of losses. Crude oil surged 18 percent and copper advanced 15 percent as European leaders reached an agreement intended to prevent the continent’s sovereign debt crisis from weakening banks and the economy. Energy and raw-material companies make up 48 percent of Canadian stocks by market value, according to Bloomberg data.

The China Federation of Logistics and Purchasing’s manufacturing index declined to 50.4, the lowest in almost three years, from 51.2 in September. Readings above 50 signal expansion.

Confidence Vote

Six members of Greek Prime Minister George Papandreou’s party urged him to resign in a letter after he called for a referendum on a new bailout package. Papandreou faces a confidence vote Nov. 4.

Stocks pared their losses after Dow Jones Newswires reported that a member of Papandreou’s Socialist Party said the referendum plan was “basically dead.” Angelos Tolkas, a spokesman for the Greek government, later told NET TV Papandreou will proceed with plans for the vote.

Banks Decline

All eight S&P/TSX banks retreated at least 1.7 percent. Royal Bank decreased 3.3 percent to C$47.04. Toronto-Dominion Bank (TD), its largest domestic rival, slipped 3.1 percent to C$72.88. Manulife Financial Corp. (MFC), North America’s fourth- largest insurer, slumped 5.6 percent to C$12.42.

Crude oil retreated and natural gas tumbled the most since Sept. 15 on the New York Mercantile Exchange. Suncor decreased 2.6 percent to C$30.92. Encana Corp. (ECA), the country’s largest natural gas producer, fell 4.2 percent to C$20.71. Bankers Petroleum Ltd. (BNK), which operates in Albania, sank 6.2 percent to C$4.97.

Base-metals and coal producers in the S&P/TSX dropped for a second day after jumping 21 percent last week.

Teck declined 4.7 percent to C$38.09. First Quantum Minerals Ltd. (FM), Canada’s second-biggest publicly traded copper producer, lost 5.6 percent to C$19.73. Mercator Minerals Ltd. (ML), which operates in Arizona, sank 12 percent to C$1.78. Uranium One Inc. (UUU), a mining company controlled by Moscow-based ARMZ Uranium Holding, plunged 6.7 percent to C$2.80.

Gold stocks rallied as the U.S. Dollar Index retreated from the highest intraday level since Oct. 12 after the report casting doubt on Papandreou’s referendum proposal.

Goldcorp Inc. (G), the world’s second-biggest company in the industry by market value, gained 3 percent to C$49.95. Centerra Gold Inc. (CG), which mines in Kyrgyzstan and Mongolia, surged 8.6 percent to C$21.46. Jaguar Mining Inc. (JAG), which operates in Brazil, soared 15 percent to C$5.93 after falling 9.2 percent yesterday.

Magna International Inc. (MG), Canada’s largest auto-parts maker, fell 5.3 percent to C$36 after General Motors Co. and Ford Motor Co. reported sales that trailed analysts’ average forecasts.

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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