Canadian Stocks Decline as Natural Gas Plunges Most Since May

Canadian stocks fell, led by energy producers, after Germany said its economy probably contracted and natural gas futures sank the most since May on forecasts for milder-than-normal weather in the U.S.

Canadian Natural Resources Ltd. (CNQ), the country’s second- largest energy company by market value, lost 3 percent as natural gas declined after settling at the lowest price in 28 months yesterday. Barrick Gold Corp. (ABX), the world’s largest gold producer, gained 1.1 percent as the metal advanced. First Quantum Minerals Ltd. (FM), Canada’s second-biggest publicly traded copper producer, decreased 3 percent after an analyst at Jefferies Group Inc. cut his price estimate on the shares.

The Standard & Poor’s/TSX Composite Index slipped 9.72 points, or 0.1 percent, to 12,260.94 after closing at the highest level since Nov. 11 yesterday.

“There’s so many question marks with respect to how they’re going to resolve their debt crisis” in Europe, Danielle Park, a money manager at Venable Park Investment Counsel Inc. in Barrie, Ontario, said in a telephone interview. The firm oversees at least C$1 million ($980,000) each for more than 250 families. “The U.S. dollar is continuing its breakout. The weak-euro story continues to be supportive of the dollar, and as the dollar strengthens, commodities weaken.”

The S&P/TSX had climbed 11 of the previous 13 days, led by raw-materials and energy producers, as data on U.S. employment, manufacturing and home sales signaled economic growth there. The U.S. accounted for 75 percent of Canadian exports in 2010, according to Statistics Canada.

Growth Concerns

German gross domestic product declined about 0.25 percent in the fourth quarter from the previous three months, the country’s statistics office said in an unofficial estimate today. The European Union’s statistics bureau cut its estimate of third-quarter euro-area economic growth to 0.1 percent from 0.2 percent today.

Gas futures fell as the U.S. National Weather Service forecast above-normal temperatures for much of the country for Jan. 18 to Jan. 24. Crude oil dropped 1.3 percent.

Canadian Natural lost 3 percent to C$38.31. Enbridge Inc. (ENB), the country’s largest pipeline company, decreased 1.7 percent to C$36.80. Trilogy Energy Corp. (TET), a western Canadian natural gas and oil producer, tumbled 9.3 percent to C$32.90 after Grant Hofer, an analyst at Barclays Plc, reduced his earnings estimates for the company.

Gold Demand

The S&P/TSX Materials Index climbed as gold futures rose after Hong Kong reported record exports of the metal to Mainland China for November.

Barrick gained 1.1 percent to C$49.74. Pan American Silver Corp. (PAA), which mines in Latin America, surged 7.4 percent to C$25.02. Teck Resources Ltd. (TCK/B), Canada’s largest base-metals and coal producer, increased 1.8 percent to C$39.35 as copper advanced to a four-week high.

First Quantum retreated 3 percent to C$22.40 after Christopher LaFemina, an analyst at Jefferies, cut his 12-month price estimate on its London-traded shares to 1,700 pence ($26.06) from 1,800 pence. Higher costs will reduce mining companies’ profits in 2012 and 2013, LaFemina wrote in a note to clients.

St. Elias Mines Ltd., which explores for gold in Peru and British Columbia, plunged 41 percent to 84 Canadian cents, the lowest since March 2010, after reporting drilling results from its Tesoro project in Peru.

Auto-parts companies Magna International Inc. (MG) and Linamar Corp. (LNR) climbed as General Motors Co. rallied 5.3 percent in New York. The biggest U.S. carmaker may shift more production to Europe to cut costs with its German union, Reuters reported, citing unnamed people familiar with the matter. Alexander E. Potter, an analyst at Piper Jaffray Cos., raised his rating on GM to “overweight” from “neutral.”

Magna, which has GM as its biggest customer and operates factories in Europe, gained 3.1 percent to C$39.52. Linamar, which also has plants in Europe as well as North America, jumped 7.4 percent, the most since September 2010, to C$15.45.

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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