Canadian stocks fell the most in five weeks as financial and energy shares declined on concern the spread of Europe’s debt crisis to Italy may weaken the global economy.
Suncor Energy Inc. (SU), the country’s largest energy company, declined 5.6 percent as natural gas futures retreated after analysts forecast supplies will near a record. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, plunged 14 percent after its earnings trailed all 13 analyst estimates in a Bloomberg survey. Royal Bank of Canada (RY), the country’s biggest lender by assets, lost 2.8 percent.
The Standard & Poor’s/TSX Composite Index dropped 332.63 points, or 2.7 percent, the most since Oct. 3, to 12,156.22. Thirteen stocks in the index advanced, the fewest since Aug. 4.
“Europe is a disaster zone,” Sebastian van Berkom, a money manager at Van Berkom & Associates in Montreal, said in a telephone interview. The firm oversees about C$1.6 billion ($1.6 billion). “With 10-year bond yields in Italy over 7 percent, we’ve got a problem. The outlook for economic growth continues to deteriorate as the financial crisis continues.”
The S&P/TSX is set to underperform the S&P 500 for the first year since 2003 as most major raw materials have declined. Energy and raw-materials companies make up 49 percent of Canadian stocks by market value, the most among major developed markets, according to Bloomberg data. Canada’s equity benchmark gauge has lost 9.6 percent this year, while its U.S. peer has slipped 2.3 percent.
Italian bond yields climbed to euro-era records today after LCH Clearnet SA raised deposit requirements for trading the debt securities. HSBC Holdings Plc, Europe’s largest lender by market value, plunged 5.8 percent in London after saying investment banking profit fell in the third quarter.
Natural gas retreated 2.5 percent on the New York Mercantile Exchange a day before the U.S. is to report inventories of the fuel. According to the median forecast of analysts in a Bloomberg survey, supplies will climb to 3.826 trillion cubic feet, within 0.4 percent of the record set last November. Crude oil declined 1.1 percent.
Suncor lost 5.6 percent to C$31.44. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, slipped 4.1 percent to C$36.97.
Canadian Oil Sands Ltd., the largest owner of the Syncrude project, decreased 5.9 percent to C$20.96 after Phil Skolnick, an analyst at Canaccord Financial Inc., cut his 12-month share- price forecast to C$25 from C$26. The company has “very little free cash flow left to support the quarterly dividend,” Skolnick wrote in a note to clients.
All major base metals traded on the London Metal Exchange fell, with copper declining for a fourth day. An index of industry companies in the S&P/TSX lost 7.5 percent, the most since Sept. 22.
Teck Resources Inc., Canada’s largest base-metals and coal producer, retreated 6.3 percent to C$37.73. Ivanhoe Mines Ltd., which is building a copper and gold mine in Mongolia with Rio Tinto Group, slumped 6.5 percent to C$21.14. Molybdenum and copper producer Mercator Minerals Ltd. (ML) dropped 11 percent to C$1.70.
First Quantum sank 14 percent, the most since May 2010, to C$19.76 after its third-quarter profit missed the average analyst estimate by 46 percent, excluding certain items. The company also cut its 2011 forecasts for copper and gold production.
Other metals companies to drop after missing analysts’ earnings estimates included Pan American Silver Corp. (PAA), which tumbled 8.5 percent to C$27.79, and molybdenum producer Thompson Creek Metals Co., which declined 8 percent to C$6.53 in the second day of trading after disclosing its financial results.
CB Gold Inc. (CBJ), which is developing a project in Colombia, plunged 19 percent to C$1.38 after restating drilling results. The shares had jumped 151 percent from Oct. 21, the trading day before the company released the original results, to yesterday.
All S&P/TSX banks and the three largest insurers declined. Royal Bank decreased 2.8 percent to C$45.13, falling behind Toronto-Dominion Bank (TD) in market value for the first time since 2000. Bank of Nova Scotia (BNS), Canada’s third-largest lender by assets, slipped 2.6 percent to C$51.33. Manulife Financial Corp. (MFC), North America’s fourth-biggest insurer, lost 5.3 percent to C$12.10.
Technology-patent owner Wi-LAN Inc. (WIN) slumped 8.5 percent to C$6.76 after cutting its 2011 sales and earnings forecasts.
Indigo Books & Music Inc., Canada’s largest bookstore chain, soared a record 36 percent to C$9.12 after Rakuten Inc. agreed to buy Kobo Inc., a maker of electronic-reading hardware and software, for $315 million. Indigo is the majority owner of Kobo.
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