Canadian Stocks Decline as Gold Slump Offsets Financial Rally

Canadian stocks fell, after the benchmark index reached a two-year high, as a drop in commodity shares offset an advance among banks.

Kinross Gold Corp. (K) and Eldorado Gold Corp. retreated at least 3.8 percent as gold fell for the first time in three days. Manulife Financial Corp. and Sun Life Financial Inc. added more than 1.5 percent. Bombardier Inc. increased 0.2 percent after announcing aircraft orders.

The Standard & Poor’s/TSX Composite Index (SPTSX) slipped 24.51 points, or 0.2 percent, to 13,458.06 at 4 p.m. in Toronto, erasing a gain of as much as 0.2 percent.

“Most of the earnings are behind us now, although the banks still have to report,” said Michael O’Brien, a fund manager with TD Asset Management Inc. in Toronto. He helps manage about C$216 billion ($207 billion) with the firm. “The biggest thing is people will continue to watch the macro data as the Fed has said for a few months their decisions will be data dependent. The big fear of investors is the Fed beginning tapering too early.”

Equities rallied this year as the U.S. Federal Reserve embarked on a monthly $85 billion bond-buying program to stimulate the economy. Fed policy makers will probably scale back the pace of asset purchases at their March 18-19 meeting, according to the median of 32 estimates in a Bloomberg survey of economists on Nov. 8.

Foreign Buyers

Foreign purchases of Canadian equities hit a four-year high in September as investors sought to take advantage of a stock rally. Non-resident investors acquired C$10.79 billion ($10.36 billion) of Canadian stocks after selling C$2.19 billion a month earlier, Statistics Canada said in a report. The S&P/TSX has climbed 11 percent since June 28, on track for the biggest six-month advance since 2010, data show.

Five of 10 S&P/TSX industries fell on trading volume in line with the 30-day average. Commodity shares sank more than 0.7 percent.

Kinross Gold retreated 4.1 percent to C$5.11 and Eldorado Gold lost 3.8 percent to C$6.59 as gold futures for December delivery fell 1.2 percent to $1,272.30 an ounce in New York.

Financial shares climbed 0.5 percent as a group for the best return among 10 main industries. Sun Life (SLF) added 1.5 percent to C$37.43 for a fourth day of gains and the highest close since 2009. Manulife, the nation’s largest insurer, gained 1.8 percent to C$19.86.

Aircraft Orders

Bombardier climbed 0.2 percent to C$4.65. The Montreal-based company said it has come to separate agreements to sell as many as eight Q400 aircraft to Palma Holding Ltd. and as many as four of the same aircraft to Air Cote d’Ivoire. The value of the combined contracts is worth as much as $423 million.

Boeing Co., the world’s largest planemaker, said it will team up with Bombardier to offer a low-cost maritime surveillance plane based on the Canadian manufacturer’s Challenger 605 business jet.

Cott Corp. climbed 2.7 percent, the most in the S&P/TSX, to C$8.88. Levin Capital Strategies LP reported a 5.3 percent stake in the beverage producer, according to a regulatory filing.

BRP Inc., the maker of Ski-Doo snowmobiles and three-wheeled motorcycles, added 0.4 percent to C$28.20. The stock has rallied 31 percent since its May debut, the best performer among Canada’s largest initial public offerings this year as revenue climbs on sales of its year-round products including all-terrain vehicles and its Can-Am Spyder three-wheel roadsters.

BRP, based in Valcourt, Quebec, raised C$262.3 million in its May stock sale and topped the 4 percent average increase of 10 companies that raised at least $100 million from IPOs in Canada this year, data show.

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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