Canadian Stocks Fall as Draghi Denies Signaling More Bond Buys

Canadian stocks fell the most in two weeks, led by raw-material and energy producers, after European Central Bank President Mario Draghi said he didn’t signal plans to purchase more bonds.

Suncor Energy Inc., Canada’s biggest oil and gas producer, decreased 3.2 percent as crude retreated. Barrick Gold Corp. (ABX), the world’s largest gold producer, dropped 1.9 percent as the U.S. Dollar Index rose for the first time this week. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, lost 4.8 percent after saying it will suspend production at two sites in the province.

The Standard & Poor’s/TSX Composite Index fell 196.94 points, or 1.6 percent, to 11,951.79.

“I don’t think Mr. Draghi provided a lot of confidence,” Gareth Watson, vice president of investment management and research at Richardson GMP Ltd. in Toronto, said in a telephone interview. The firm oversees about C$16 billion ($15.7 billion). “The ECB is saying, ‘Look, if you thought we were always going to be there to bail you out, we’re sending you the message now we’re not going to automatically bend to political pressure just because that’s what the market wants us to do.’”

All developed-market benchmark stock indexes have fallen this year as the European debt crisis has overshadowed increases in corporate profits. The S&P/TSX has dropped 11 percent this year after advancing seven of the previous eight years.

Draghi said he was “kind of surprised” that his remarks last week were viewed as a suggestion the ECB would intensify bond purchases. He had said on Dec. 1 that “other elements” could follow a push toward a fiscal union.

Market’s Reaction

The euro and gold, oil and copper retreated after Draghi’s comments today.

The S&P/TSX Energy Index fell as crude futures slipped below $99 a barrel on the New York Mercantile Exchange. Suncor declined 3.2 percent to C$29.54. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, lost 3.1 percent to C$37.08. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, tumbled 5.4 percent to C$12.54, a sixth-straight drop.

Tag Oil Ltd. (TAO), which explores in New Zealand, soared 18 percent, the most since September 2010, to C$7.40 after reporting a new discovery.

Oil-sands developer Connacher Oil & Gas Ltd. jumped 51 percent, the most since August 2005, to 92 Canadian cents after saying it has received an unsolicited takeover offer. The shares have surged 188 percent in the last two weeks.

Gold Slump

Barrick declined 1.9 percent to C$50.82 as gold slumped the most since Nov. 21. Goldcorp Inc. (G), the world’s second-largest producer of the metal by market value, dropped 1.7 percent to C$51.65. China Gold International Resources Corp. decreased 6 percent to C$2.68.

Harry Winston Diamond Corp., the co-owner of the Diavik mine featured on the television series “Ice Road Truckers,” sank 6.5 percent to C$10.71 before the scheduled release of its third-quarter financial results. (HW)

Base-metals and coal stocks in the S&P/TSX declined as copper futures dropped for a third day. Teck Resources Ltd. (TCK/B), Canada’s largest company in the industry, lost 3.6 percent to C$37.36. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, slumped 5.4 percent to C$19.50. Lundin Mining Corp., which operates in Europe, decreased 5.9 percent to C$4.02.

Mines Shut

Potash Corp. lost 4.8 percent to C$41.96, the lowest close since August 2010. The company will shut down its Lanigan facility for eight weeks and its Rocanville mine for six weeks, part of its “practice of matching supply with demand,” according to an e-mailed statement.

The S&P/TSX Financials Index fell after closing at a four- week high yesterday. Royal Bank of Canada (RY), the country’s biggest lender by assets, slipped 1.5 percent to C$48.81. BMO, Canada’s fourth-biggest lender, dropped 1.5 percent to C$56.31, extending its three-day slump to 5.9 percent. Sun Life Financial Inc. (SLF), Canada’s third-largest insurer, declined 4.6 percent to C$18.28.

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

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.