Canada Stocks Fall as Manufacturing Data Drags on Miners

Canadian stocks fell as raw materials companies declined after manufacturing slumped more than forecast in the New York region, showing weakness in the industry is persisting as the year draws to a close.

First Quantum Minerals Ltd. (FM), a producer of copper in Africa, dropped 4 percent after it raised its bid for Inmet Mining Corp. to C$5.1 billion ($5.17 billion). Inmet rose 4.3 percent. First Majestic Silver Corp. (FR) plunged 10 percent after it announced a deal to acquire Orko Silver Corp. yesterday. Sun Life Financial Inc. (SLF) slipped 3.9 percent after the insurer agreed to sell a U.S. annuity business to a firm owned by Guggenheim Partners LLC in a $1.35 billion deal.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 15.37 points, or 0.1 percent, to 12,281.35 at 4 p.m. in Toronto. The equity gauge has gained 2.7 percent this year.

“Commodities are pretty flat today,” said Paul Harris, fund manager with Avenue Investment Management in Toronto. His firm manages about C$300 million. “Gold doesn’t look as great on the charts; it could go to $2,000 but people are feeling it will go lower short-term before it goes higher. Gold went from $1,500 in June to $1,800 and now it’s pulled back.”

The price of gold has fallen more than 5 percent since reaching a second-half high of $1,798.60 in October. Gold for February delivery gained 0.1 percent to settle at $1,698.20 an ounce in New York.

Yamana Gold Inc. lost 1.9 percent to C$16.90 and Goldcorp Inc., the second-largest producer of the metal, dropped 0.4 percent to C$36.33.

Factory Gauge

A Federal Reserve gauge of manufacturing in the New York region shrank more than forecast to minus 8.1 in December. The median forecast of 55 economists in a Bloomberg survey called for minus 1. Readings of less than zero indicate contraction.

Mining and bank stocks contributed most to losses in the S&P/TSX. Trading volume was 28 percent higher than the 30-day average at this time of the day.

First Majestic plunged 10 percent to C$20.29 after it announced a plan to acquire Orko (OK) for about C$387 million. As part of the deal, First Majestic will issue 17.1 million common shares. Orko, which is developing a silver project in Mexico, surged 51 percent to C$2.39.

Silvercorp Metals Inc. retreated 7.7 percent to C$5.18 and Fortuna Silver Mines Inc. sank 5.5 percent to C$4.26.

First Quantum fell 4 percent to C$20.11 after raising its bid for Inmet a second time. The company is now offering C$72 in stock and cash for each Inmet share. The bid is 2.9 percent more than the previous offer of C$70 a share.

Inmet, which is developing the Cobre Panama copper project in Panama, climbed 4.3 percent to C$72.85, suggesting investors are speculating other suitors will bid for the company.

Copper Stockpiles

HudBay Minerals Inc. (HBM) lost 3 percent to C$10.37. Copper for March delivery slipped 0.5 percent to settle at $3.666 a pound, as inventories tracked by the London Metal Exchange jumped the most in more than four years.

Sun Life Financial Inc., Canada’s third-largest insurer, lost 3.9 percent to C$26.74. Sun Life expects the sale of the U.S. annuity business to reduce earnings by about 22 cents a share in 2013.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net