Canadian Stocks Fall as Commodities Slump on European Concern

Canadian stocks fell to a four-week low, led by raw-materials companies, as oil, metals and world equities declined on concern that the European debt crisis will curb growth.

Barrick Gold Corp. (ABX), the world’s largest gold producer, decreased 3.8 percent after futures dropped the most in seven weeks as investors sold precious metals to cover losses in other assets. Agrium Inc. (AGU), a farm retailer and fertilizer producer, tumbled 6.5 percent as corn and wheat retreated. Royal Bank of Canada (RY), the country’s biggest lender by assets, dropped 2.6 percent as Spanish bond yields surged to a euro-era high.

The Standard & Poor’s/TSX Composite Index fell 258.93 points, or 2.1 percent, to 11,915.43, the lowest level since Oct. 20.

“Two real countries are in the midst of a massive funding crisis,” Keith McLean, a managing partner at GMP Investment Management in Toronto, said in a telephone interview, referring to Italy and Spain. McLean oversees about C$200 million ($195 million). “Everyone knows the exit price for gold, oil, copper, everything is higher. But if we go into an ‘08 scenario, those prices go a lot lower before they go a lot higher, even gold.’’

The S&P/TSX has dropped 11 percent this year as stocks in the index’s three biggest industries --finance, energy and raw materials -- have declined. Equities most-closely tied to the economy had retreated in part on concern the European crisis will lead to sovereign-debt defaults or a recession.

Bond Sale

Spanish bond yields rose today as the country’s Treasury failed to meet its maximum target of 4 billion euros ($5.4 billion) of notes in a sale. The Madrid-based Treasury sold 3.56 billion euros in bonds at an average yield of 6.975 percent.

The European Financial Stability Facility has no plans for financial assistance for Italy, Reuters quoted an unnamed euro- zone official as saying today. Italian bonds yields also rose this month to highest level since the introduction of the euro.

Precious-metals companies in the S&P/TSX fell today as gold dropped and silver declined the most since Sept. 23 on the Comex in New York.

Barrick lost 3.8 percent to C$50.66. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, slipped 1.9 percent to C$52.51. Silver Wheaton Corp. (SLW), Canada’s fourth- biggest precious-metals company by market value, decreased 6.5 percent to C$33.19.

Avion Gold Corp., which mines in Africa, slumped 11 percent to C$1.64. The shares have plunged 25 percent since the company cut its 2011 production forecast on Nov. 15.

Grains Fall

Corn futures retreated the most since Sept. 30 after the U.S. Agriculture Department said exports of the crop fell to the lowest since June 2004 last week. Profercy, a Leamington Spa, England-based firm that provides research on the fertilizer industry, said natural gas prices will fall in Ukraine, which would reduce a cost advantage for North American producers of nitrogen-based fertilizers.

Agrium dropped 6.5 percent, the most since October 2009, to C$72.26. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, declined 4.3 percent to C$44.11 for a fourth-straight loss.

The S&P/TSX Commercial Banks Index closed at the lowest level since February 2010. Royal Bank decreased 2.6 percent to C$43.95, the lowest price since May 2009. Bank of Nova Scotia (BNS), Canada’s third-largest lender by assets, retreated 3.2 percent to C$49.32. Manulife Financial Corp. (MFC), North America’s fourth- biggest insurer, fell 2.6 percent to C$11.49.

Oil Retreats

Energy stocks declined as crude oil erased yesterday’s 3.2 percent gain, dropping under $99 a barrel. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, lost 3.9 percent to C$37.19. Suncor Energy Inc. (SU), Canada’s biggest oil and gas producer, slipped 2.8 percent to C$31.82. Precision Drilling Corp. (PD), Canada’s largest contract driller, slumped 6.8 percent to C$11.45.

Iberian Minerals Corp. (IZN), a base-metals producer with operations in Spain and Peru, soared 38 percent, the most since July 2003, to C$1.09 after agreeing to be bought by Trafigura Beheer BV. The Amsterdam-based oil and metals trading company said it would pay C$1.10 a share for the 52 percent of Iberian it doesn’t already own.

Pharmacy-benefits manager SXC Health Solutions Corp. (SXC) climbed 7.6 percent to C$54.40 after saying it will buy Greenwood Village, Colorado-based peer HealthTrans LLC. SXC will pay $250 million for HealthTrans, which has about $270 million in annual revenue, SXC said in a statement.

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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