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Canada Stocks Decline as Gold Slump Offsets U.S. Profit Reports

Canadian stocks fell as metals producers slumped, offsetting economic optimism after the European Central Bank said banks will repay more of their loans than forecast and U.S. corporate earnings topped forecasts.

Kinross Gold Corp. and Eldorado Gold Corp. slumped more than 5.1 percent as the gold price fell to a two-week low. Silver Wheaton Corp. and Silver Standard Resources Inc. lost at least 1.8 percent as the price of the metal declined. Pacific Rubiales Energy Corp. (PRE) climbed 3.6 percent after one of its development partners discovered oil off the coast of Brazil. Agrium Inc. (AGU) gained 1.3 percent after an analyst with Desjardins Securities Inc. raised his rating for the stock to a buy.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 7.59 points, or 0.1 percent, to 12,816.03 in Toronto. The benchmark gauge increased 0.7 percent this week for a fourth week of gains, the longest stretch in almost a year.

“The whole world has had a nice recovery,” Barry Schwartz, who helps manage C$480 million ($476 million) as a fund manager at Toronto-based Baskin Financial Services, said in a phone interview. “So far the U.S. profits have been very strong. I would suspect we’re going to see that go across the border. That will lead us to continue to rally as we are.”

Some 278 European financial institutions will return 137.2 billion euros ($184.4 billion) on Jan. 30, the first opportunity for early repayment of the initial three-year loan, the Frankfurt-based ECB said in a statement today. That compares with the median forecast of 84 billion euros in a Bloomberg News survey of economists.

U.S. Earnings

About 76 percent of the 147 companies in the S&P 500 that have released results so far this quarter exceeded profit projections. Analysts are turning more optimistic about U.S. earnings, boosting their projections for fourth-quarter profit growth to 4 percent from 2.9 percent at the beginning of the month, the data show.

Gold producers contributed most to declines in the S&P/TSX. Trading volume was 7.1 percent lower than the 30-day average.

The S&P/TSX Gold subindex fell 2.5 percent to its lowest level since August as 30 of 31 members declined.

Kinross sank 5.1 percent to C$8.58 and Eldorado Gold tumbled 5.3 percent to C$11.55. Gold for February delivery lost 0.8 percent to settle at $1,656.60 an ounce in New York, for a third straight day of declines.

Silver Wheaton lost 2.1 percent to C$34.55 and Silver Standard Resources slipped 1.8 percent to C$12.40. Silver for March delivery fell 1.6 percent to $31.206 an ounce.

Kangaroo-1

Pacific Rubiales rose 3.6 percent to C$23.26 after Karoon Gas Australia Ltd. (KAR) said it has found oil at the Kangaroo-1 exploration well in Brazil’s Santos Basin. Pacific Rubiales in September agreed to purchase a 35 percent stake in Karoon’s exploration blocks off Brazil.

Agrium, operator of the largest U.S. network of agricultural retail outlets, added 1.3 percent to a record C$115.36.

John Hughes, an analyst with Desjardins, raised his rating for the stock to buy from hold while increasing his price target to C$125 from C$106.30 after the company reported fourth-quarter earnings that exceeded analysts’ estimates. Profit excluding one-time items will be “slightly above” $2 a share, buoyed by demand for crop nutrients, Calgary-based Agrium said in a statement yesterday. In November, the company forecast $1.50 to $1.90 a share.

RIM, Lenovo

Research in Motion Ltd. fell 1.1 percent to C$17.61. Canada would closely examine any proposal for a tie-up between Chinese computer-maker Lenovo Group Ltd. and RIM, Finance Minister Jim Flaherty said in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland yesterday.

The BlackBerry maker jumped 2.9 percent yesterday to the highest level in more than a year after Lenovo said it was considering a bid among other options for expanding its mobile- devices business. RIM, Canada’s largest-listed technology company, has said it’s assessing strategic options after losing market share to Apple Inc. and Samsung Electronics Co.

To contact the reporters on this story: Eric Lam in Toronto at elam87@bloomberg.net; Sarah Pringle in New York at springle1@bloomberg.net

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

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