Canadian Stocks Fall as Energy Shares Decline With Oil

Canadian stocks fell for a second day as energy shares dropped with oil prices on forecasts that the U.S. will report crude stockpiles rose and growing concern that demand will slow in China.

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, decreased 1.2 percent. Teck Resources Ltd. (TCK/B), the country’s largest base-metals and coal producer, retreated 2.3 percent as copper declined the most in two weeks. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 3.9 percent after Canpotex Ltd., the North American potash cartel, signed a contract to supply the fertilizer to Sinofert Holdings Ltd. in China at the same price as the second half of last year.

The S&P/TSX Composite Index (SPTSX) decreased 49 points, or 0.4 percent, to 12,430.70 in Toronto.

“The actions we’ve seen in China recently suggest that they might curb some demand” for oil, Daniel L. Bain, chief investment officer of Thornmark Asset Management Inc. in Toronto, said in a telephone interview. Bain oversees about C$400 million ($402 million). “There has also been a conflict risk premium built into the price, and people might be seeing that as a bit excessive, especially if we see any sort of diplomatic resolution in the Middle East.”

The S&P/TSX slipped 0.1 percent last week as economic data from the U.S. helped commodity shares pare losses after China reported a smaller gain in exports than economists had forecast. Energy and raw-materials companies make up 46 percent of Canadian stocks by market value, according to Bloomberg data.

Demand Concerns

Energy stocks in the S&P/TSX fell today as oil dropped before a report that will show crude stockpiles increased to a six-month high last week, according to the median estimate in a Bloomberg News survey. China, the world’s second-largest oil consuming country, increased motor fuel prices for the second time in less than six weeks. Gu Xianghua, deputy secretary general of China Association of Automobile Manufacturers, said the country’s vehicle sales may miss industry targets.

Suncor Energy fell 1.2 percent to C$33.05. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy producer, slipped 1.9 percent to C$34.84. Nexen Inc. (NXY), which develops and produces oil in Yemen, dropped 2 percent to C$19.05.

An index of diversified metal stocks in the S&P/TSX decreased after copper fell as swelling inventories and a slowing economy signaled slackening demand in China.

Lundin, Teck

Lundin Mining Corp. (LUN), which explores for and produces base metals in Europe, fell 3.5 percent to C$4.68. Teck Resources decreased 2.3 percent to C$35.74.

Industrial stocks in the S&P/TSX dropped, fueled by rail companies, as falling commodity prices and growing stockpiles reduced demand for their services. Concern is also growing over foreign demand after China’s government cut its target for annual economic growth this month to 7.5 percent from 8 percent.

Canadian National Railway Co., the country’s largest railroad, decreased 1.9 percent to C$77.46. Canadian Pacific Railway Ltd. (CP), the nation’s second-largest railroad, dropped 0.9 percent to C$76.92. Bombardier Inc. (BBD/B), which makes trains and airplanes, fell 0.3 percent to C$4.05.

Viterra Inc. (VT), Canada’s biggest grain handler, fell 0.4 percent to C$15.91 after Glencore International Plc agreed to buy the company for C$6.1 billion to add grain assets in Canada and Australia. The C$16.25 a share purchase price is a 48 percent premium to Viterra’s closing price on March 8, the day before the company said it had received expressions of interest.

“The massive amount of cash on corporate balance sheets along with massive equity and debt issuances will lead to more M&A activity,” Bain said. “We’re already starting to see some action.”

Agrium Inc. (AGU), a Calgary-based fertilizer producer that is a partner in the deal with Glencore, advanced 2.2 percent to C$87.60.

Potash Corp. jumped 3.9 percent to C$46.40 after Canpotex agreed to supply 500,000 metric tons of potash to Sinofert in the second quarter.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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