Canada Stocks Fall as Bank Slump Overshadows Miner Gains

Canadian stocks fell, after reaching a five-year high yesterday, as investors weighed developments in Ukraine and assessed U.S. economic data before a jobs report tomorrow.

SNC-Lavalin Group Inc. (SNC) dropped 4.1 percent after quarterly profit fell. Valeant Pharmaceuticals International Inc. plunged 5.3 percent for its biggest slide in almost two years. Air Canada jumped 8 percent for a third day of gains. Pretium Resources Inc. added 3.2 percent as gold rallied. Royal Bank of Canada fell 0.7 percent to pace declines among the nation’s biggest lenders.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 32.25 points, or 0.2 percent, to 14,271.92 at 4 p.m. in Toronto. The index has gained 4.8 percent this year. Trading was 9.7 percent below the 30-day average.

“We’re flipping around a bit here,” said Andrew Pyle, fund manager at ScotiaMcLeod Inc. in Peterborough, Ontario. He manages about C$220 million ($200 million). “This market is treading softly right now. No one is going to make an aggressive bet. You’re going to see a meandering market going into payrolls tomorrow, and then awaiting further developments in the Ukraine.”

U.S. and European leaders intensified diplomatic efforts to defuse the crisis in Ukraine, after Russia’s foreign minister evaded a U.S. attempt to get him to talk to his counterpart in Kiev. Crimean lawmakers called a March 16 referendum to return Ukraine’s Black Sea peninsula to Russia.

Data from the U.S. today showed that fewer Americans than projected filed applications for unemployment benefits last week, an indication companies are holding on to staff even as cold weather threatens to slow the world’s largest economy. The Labor Department will release its February jobs report tomorrow.

‘Modest Improvement’

“The claims data provides some early evidence of a modest improvement in the employment picture heading into March,” said Josh Nye, economist at RBC Capital Markets, in a note to clients. “We expect more robust employment growth in the coming months as firms become more confident in hiring.”

Mario Draghi, European Central Bank president, said inflation in the euro region will accelerate over the next 2 1/2 years, as he maintained the bank’s commitment to keeping interest rates low for “an extended period of time.” Gold, seen by investors as a hedge against inflation, rallied 0.9 percent in New York.

Five of 10 main groups in the S&P/TSX fell today, led by a a 4.5 percent drop among health-care companies. Valeant Pharmaceuticals International Inc. slumped 5.3 percent to C$151.53, the biggest decline since May 2012.

Bank Stocks

Royal Bank of Canada slipped 0.7 percent to C$71.87 and Bank of Montreal lost 0.4 percent to C$72.29 as the S&P/TSX Financials Index retreated 0.3 percent as a group.

SNC dropped 4.1 percent to C$46.39, the biggest decline since October. Canada’s largest engineering company reported a fall in fourth-quarter profit and said earnings would be less than analysts were estimating in 2014 due to a slump in commodity markets and unprofitable road projects.

An index of materials producers advanced 0.6 percent, a fourth straight gain that left the gauge with the highest close since April.

Novagold Resources Inc. climbed 6 percent to C$4.75 for a sixth day of gains. Pretium Resources added 3.2 percent to C$7.42.

Sherritt International Corp., which owns an interest in a nickel and cobalt metals business, jumped 7.6 percent to C$3.54 for a third day of gains. Nickel reached a nine-month high amid concern that the U.S. will impose trade sanctions on Russia, exacerbating supply constraints.

Air Canada (AC/B), the nation’s largest airline, jumped 8 percent to C$6.48, the biggest increase in six weeks. The stock, the best performer in the S&P/TSX last year with a 323 percent advance, has rallied 12 percent in the past three days.

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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