Canadian Stocks Fall to Two-Month Low as Iamgold, Fortis Drop

Canadian stocks fell to a two-month low, led by gold mining companies amid speculation the Federal Reserve will reduce stimulus.

Iamgold Corp. (IMG) sank 11 percent after suspending its dividend due to declines in the price of the metal. Fortis (FTS) Inc. dropped 3.7 percent after agreeing to buy UNS Energy Corp. for $2.5 billion. Mercator Minerals Ltd. more than doubled after Russian billionaire Mikhail Prokhorov’s Intergeo MMC Ltd. agreed to acquire the company. Canadian National Railway Co. and Canadian Pacific Railway Ltd. paced gains among industrial stocks.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 19.03 points, or 0.1 percent, to 13,114.39 at 4 p.m. in Toronto, the lowest since Oct. 17. The benchmark equity gauge pared an earlier loss of 0.6 percent. The index is up 5.5 percent this year, the fourth-worst performer among developed markets ahead of Austria, Hong Kong and Singapore.

“Over time, the long-term trend will be upwards,” said Barry Schwartz, a fund manager with Baskin Financial Services Inc. in Toronto. He helps manage C$585 million ($549.5 million) with the firm. “It’s an extremely long walk and sometimes you have to stop and catch your breath, which is what’s happening the last few days after an unbelievable run.”

Fed Stimulus

Investors are weighing economic data ahead of the next meeting of the Federal Open Market Committee on Dec. 17-18, which may result in the Fed reducing its $85 billion a month in bond purchases.

U.S. retail sales rose 0.7 percent in November, more than forecast and the most since June, as Americans bought more cars and took advantage of discounts going into the holiday-shopping season, Commerce Department figures showed today in Washington.

Fortis slid 3.8 percent to C$30.01. Utilities slumped 1.7 percent to lead declines among six of 10 industries in the S&P/TSX.

Fortis, Canada’s largest investor-owned natural gas and electric utility, will pay $2.5 billion in cash to buy UNS Energy to expand into markets with more growth prospects, the company said in a statement yesterday.

Iamgold dropped 11 percent to C$3.63, a five-year low, after suspending its dividend to conserve cash. Steve Letwin, chief executive officer at the gold producing company, said in a statement that Iamgold is on target to reduce costs by $100 million this year.

Gold Retreat

Dundee Precious Metals fell 1.1 percent to C$2.68 and Eldorado Gold retreated 1.2 percent to C$5.95 as the price of gold dropped the most since Oct. 1. Gold futures for February delivery declined 2.6 percent to $1,224.90 an ounce in New York.

Canadian National Railway advanced 1.3 percent to C$58.40 and Canadian Pacific Railway rose 0.9 percent to C$160.28 to snap three days of declines. Industrial shares rose 0.7 percent, the most in the S&P/TSX.

Mercator Minerals soared 111 percent to 9.5 Canadian cents, the biggest increase in 11 years. The Vancouver-based copper producer will be renamed Intergeo Mining Ltd., giving Prokhorov’s Onexim Group a listing in Canada. Terms of the deal were not disclosed.

Redknee Solutions Inc., which works on infrastructure software for mobile networks, sank 20 percent to C$5.73 for the biggest decline since 2009. The Mississauga, Ontario-based company yesterday reported a fourth-quarter loss yesterday on acquisition costs. Gross margin shrank to 54 percent from 69 percent a year ago, Redknee said.

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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