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Canada Stocks Fall as Lower Gold Prices Weigh on Mining Shares

Canadian stocks fell as gold producers tumbled after Cyprus’s bailout deal and better-than- estimated U.S. economic data sent the metal’s price lower for a third day.

Yamana Gold Inc. and Goldcorp Inc. each dropped 0.9 percent. Turquoise Hill Resources Ltd. (TRQ) declined 2 percent after results missed analysts’ expectations. Royal Bank of Canada, the nation’s largest lender, and Bank of Nova Scotia gained more than 0.1 percent after Canada’s government said the country’s six largest banks are “systemically important” and need to set aside more capital.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 15.22 points, or 0.1 percent, to 12,665.49 at 12:45 p.m. in Toronto. The S&P/TSX is up 1.9 percent for the year. Trading volume was 31 percent lower than the 30-day average at this time of the day.

“Commodity prices are putting a little bit of pressure on the markets today,” said John O’Connell, chief executive officer with Davis Rea Ltd., which manages about C$600 million ($590 million) in Toronto.

Raw-materials stocks fell the most in the S&P/TSX, dropping 1.2 percent as a group. Gold futures for June delivery declined 0.5 percent to $1,598.70 an ounce as its attractiveness as a safe haven waned. The metal headed for the second straight quarterly loss, the longest slump since 2001.

Euro-area leaders agreed yesterday to a 10 billion-euro ($13 billion) bailout of Cyprus’s banking system, easing concerns Europe’s debt crisis will worsen. Orders for U.S. durable goods climbed more than forecast in February, rising 5.7 percent. The S&P/Case-Shiller index of home prices gained the most since 2006.

Gold Producers

Yamana Gold lost 0.9 percent to C$15.26. and Goldcorp slid 0.9 percent to C$33.36. Barrick Gold Corp., the world’s largest gold producer, fell 1.2 percent to C$29.27. Founder and Co- Chairman Peter Munk said yesterday he and his directors have been considering “new leadership” for the board.

Turquoise Hill retreated 2 percent to C$6.33. The company, which owns a 66 percent stake in the Oyu Tolgoi copper and gold mine project in Mongolia, reported a fourth-quarter adjusted loss of 18 cents a share, compared with estimates of a loss of 5 cents, according to a survey of five analysts by Bloomberg.

Bank Surcharge

Royal Bank added 0.1 percent to C$61.24 and the Bank of Nova Scotia rose 0.4 percent to C$59.69 even as Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, said today the nation’s six largest banks will be subject to a surcharge equal to 1 percent of risk weighted capital by Jan. 1, 2016.

“Investors are giving banks the benefit of the doubt and reasonably so,” O’Connell said. “It wasn’t a surprise. They’re clearly in great shape, so nobody’s really worried about these banks.”

Each bank will also have to hold debt that can be converted to capital if it fails, reducing the need for a taxpayer-funded bailout. Canadian banks have been ranked the world’s soundest for the past five years by the World Economic Forum.

Just Energy Group Inc. rallied 10 percent to C$6.80 after its executive chairman said the natural gas and power supplier does not plan additional dividend cuts. The stock slid 14 percent over the previous four days.

“We recognize there are rumors in the market regarding a further dividend reduction,” Rebecca MacDonald said in a statement yesterday. “At this point we do not expect any further changes to our dividend payout.”

The Toronto-based company cut its quarterly dividend to 7 Canadian cents a share from 10 cents a share on Feb. 7.

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

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