Canadian stocks fell, sending the benchmark index to a five-week low, as Morgan Stanley cut its rating on Research In Motion Ltd. and oil slid on concern European leaders may fail to calm the debt crisis.
RIM (RIM) tumbled 7.5 percent after Morgan Stanley cited “rapidly deteriorating fundamentals” at the BlackBerry maker. The three largest energy providers in Canada, Suncor Energy Inc., Imperial Oil Ltd. and Canadian Natural Resources Ltd., dropped at least 1.2 percent as oil traded below $80 a barrel for a third day.
The Standard & Poor’s/TSX Composite Index decreased 105.15 points, or 0.9 percent, to 11,330.39. The index has fallen 1.6 percent in June, heading for a fourth straight month of losses.
“It’s a very negative sentiment when it comes to Europe,” Jeff Parent, who manages more than $100 million at Toronto-based Quadrexx Asset Management Inc., said in a phone interview. “Oil will be sold off as a result.”
Failure by leaders at the summit to come up with measures to shore up the weakest countries may be “fatal” for the euro, billionaire investor George Soros said yesterday.
Energy and financial stocks contributed most to the drop in the S&P/TSX out of 10 industries. Among stocks in the gauge, 190 declined and 48 gained.
Research In Motion declined 7.5 percent to C$9.36, the lowest level since October 2003.
“The only way RIM remains a viable entity is at a fraction of its current size, a transformation that erases much of its earnings power,” Ehud Gelblum, an analyst at Morgan Stanley in New York, wrote in a note to investors today.
Suncor Energy, the nation’s largest oil provider, declined 1.9 percent to C$27.72. Imperial Oil, the second-largest, slipped 1.4 percent to C$40.24. Canadian Natural Resources lost 1.2 percent to C$26.68.
Oil for August delivery declined 0.7 percent to $79.21 a barrel on the New York Mercantile Exchange. Brent oil rose 3 cents to $91.01 a barrel. Brent crude dropping to $70 dollars a barrel may be a “real possibility,” Citigroup Inc. chief technical analyst Tom Fitzpatrick wrote in a note.
Gold futures climbed the most in three weeks as European debt concerns mounted, spurring demand for the metal as a hedge. The metal rose 1.4 percent to $1,588.40 an ounce on the Comex in New York.
Barrick Gold Corp. (ABX), the world’s largest gold producer, added 1.5 percent to C$39.42. Centerra Gold Inc. rose 3.2 percent to C$8.99, snapping a three-day loss.
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