Canadian Stocks Fall as Banks Slump Amid European Debt Concerns

Canadian stocks fell, extending a monthly decline, as banks and energy producers slumped amid growing concern over Europe’s debt crisis.

Financial stocks retreated as Toronto-Dominion Bank and Royal Bank of Canada fell at least 0.9 percent. AGF Management Ltd. slipped 5.7 percent after the asset manager received a notice from the national tax collector. Niko Resources Ltd. rose 10 percent after saying it’s in negotiations to sell C$157 million ($154 million) worth of assets. Alacer Gold Corp. and Centerra Gold Inc. added more than 3.6 percent as gold prices increased for the first time in four days.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 6.73 points, or 0.1 percent, to 12,699.65 at 4 p.m. in Toronto. The S&P/TSX lost as much as 0.7 percent earlier in the day and is down 1 percent in March. Trading volume was 4.3 percent lower than the 30-day average.

“Fears out of Europe are containing enthusiasm, and if you’re afraid of Europe then gold is the place to be,” Barry Schwartz, fund manager with Baskin Financial Services who helps manage about C$500 million, said from Toronto.

The Institute of International Finance said banks in Portugal, Spain and Italy may come under funding pressure after a deal yesterday in Cyprus rescued the island’s financial system at the expense of bank creditors.

Forced Losses

European governments and the International Monetary Fund agreed earlier this week to lend Cyprus 10 billion euros ($13 billion) as long as the country liquidated its second-largest bank and forced losses on bank bondholders and deposits of more than 100,000 euros.

Canadian consumer prices rose 1.2 percent in February, the fastest monthly pace since 1991, on a spike in gasoline and clothing prices. The figure remains below the central bank’s 2 percent target.

Financial shares contributed most to the S&P/TSX decline, retreating 0.7 percent as a group. Royal Bank of Canada, the country’s largest lender, slipped 1.3 percent to C$60.71 as the firm announced plans to issue more U.S. covered bonds. Toronto Dominion fell 0.9 percent to C$83.95.

AGF Management (AGF/B) declined 5.7 percent to C$10.84. The asset manager said the Canadian Revenue Agency contacted the firm about the transfer pricing and allocation of income between a Canadian and foreign subsidiary within AGF Management. The CRA could reassess tax years 2005 through 2007. AGF Management said it plans to rebut any formal assessment the agency may request.

Oil Rises

Energy producers pared losses as oil rose to a five-week high after a government report showed that U.S. refineries boosted operating rates. Crude tumbled as much as 0.8 percent earlier in the day, on a report that U.S. inventories rose.

Oil producer Suncor Energy Inc. dropped 1.1 percent to C$30.40. Crude pipeline operator Enbridge Inc. slid 0.6 percent to C$47.

Niko Resources added 10 percent to C$5.82. The oil and natural gas explorer with operations in Bangladesh, Pakistan and India, is in “advanced negotiations” with two potential buyers for undisclosed assets, the company said today in a statement. It plans to complete the agreements by the end of next month.

Raw-materials producers climbed 1.1 percent as a group, as gold advanced 0.6 percent to settle at $1,607.20 an ounce. The metal has risen 1.8 percent in March as Europe’s debt woes spurred demand for gold as a haven.

Alacer Gold (ASR) gained 5.6 percent to C$4.16 and Centerra Gold rose 3.6 percent to C$6.27. Barrick Gold Corp. (ABX), the largest gold producer in the world, added 2 percent to C$29.90.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

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

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