Canada Stocks Fall as U.S. Fed Minutes Show Support for Tapering

Canadian stocks fell for the second time in three days as gold producers slumped the most in two weeks after minutes from the U.S. Federal Reserve’s July meeting showed policy makers support plans to slow stimulus.

Kinross Gold Corp. and Semafo Inc. sank at least 5.7 percent as the price of gold retreated. Niko Resources Ltd. (NKO) fell 8 percent after an analyst lowered his rating for the company due to concerns about its finances. Canadian Natural Resources Ltd. retreated 0.9 percent as crude declined to a two-week low. Teck Resources Ltd. declined for a fourth day as the price of copper tumbled.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 97.03 points, or 0.8 percent, to 12,573.08 at 4 p.m. in Toronto. The index has gained 1.1 percent this year. Trading volume was 2.5 percent lower than the 30-day average.

“Most investors had come to the conclusion tapering was happening one way or another, and this is just another confirmation,” Anish Chopra, a fund manager with TD Asset Management Inc., said from Toronto. His firm manages C$216 billion ($207 billion). “There’s still questions about the timeline, and the amount. Some investors may still have thought there was some division. That’s not a question anymore.”

Officials with the Federal Open Market Committee were “comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year if the economy improves, with a few saying tapering might be needed soon, minutes from their July meeting show.

Policy makers will also gather in Jackson Hole, Wyoming, this week to discuss monetary policy. About 65 percent of economists surveyed by Bloomberg News predict policy makers will taper stimulus in September.

Tapering Timing

“Our base-case assumption remains that the tapering will begin in October -- with September still a possibility,” said Mark Chandler, head of Canadian fixed income strategy with RBC Capital Markets in Toronto, in a report this morning before the minutes were released.

Raw-materials producers slumped 3 percent as a group, the most since Aug. 6, declining the most in the S&P/TSX as all 10 industries retreated.

Semafo sank 7.2 percent to C$2.31 and Kinross Gold fell 5.7 percent to C$5.79 as gold for December delivery slipped 0.1 percent to settle at $1,370.80 an ounce. Gold has tumbled 19 percent this year. The S&P/TSX Gold Index lost 3.6 percent, the most since Aug. 6, after rallying to a four-month high yesterday.

Teck Resources, Canada’s largest diversified miner, fell 4.6 percent to C$26.28 for a fourth day of declines, the longest such streak since June. The stock has lost 9.6 percent since Aug. 15.

Copper Slump

Copper prices slid 0.9 percent. A Chinese factory gauge due tomorrow from HSBC Holdings Plc and Markit Economics will show manufacturing continued to contract in August, economists surveyed by Bloomberg said.

Niko Resources slipped 8 percent to C$5.73 for a four-month low. Darren Engels, analyst with FirstEnergy Capital Corp. in Calgary, lowered his rating for the stock to market perform, the equivalent of hold, and dropped his price target to C$8.50 from C$14.

“There is far too much uncertainty regarding the company’s finances,” Engels said in a note to clients today.

Canadian Natural Resources retreated 0.9 percent to C$30.68 as crude declined 1.2 percent in New York. The U.S. Energy Information Administration said stockpiles fell by 1.43 million barrels last week. Analysts had forecast a decline of 1.5 million barrels.

BlackBerry Ltd. sank 2.5 percent to C$10.73 after Canada’s Industry Minister James Moore said the company must revive itself without help from the government.

“It’s for them to engage the market and provide devices and services, platforms, content that the market will receive well,” Moore said.

The Waterloo, Ontario-based smartphone maker announced it was forming a special committee to consider a possible sale on Aug. 12.

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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