Canadian stocks fell, led by energy producers, on concern a slowdown in China’s manufacturing sector will cause global economic growth to falter.
Canadian Natural Resources Ltd., the country’s second-biggest energy company, dropped 5.6 percent. Barrick Gold Corp., the world’s largest producer, rose 1.7 percent, on demand for the precious metal as an alternative investment. Bank of Nova Scotia, Canada’s third-largest bank by assets, gained 2.6 percent after second-quarter profit jumped to a record, boosted by higher fees from lending and credit cards.
The Standard & Poor’s/TSX Composite Index lost 191.02 points, or 1.6 percent, to 11,571.97 in Toronto. Stocks extended their losses after a report that Lebanon fired on Israeli warplanes spurred concern tensions in the Middle East are escalating.
“There is still concern about where global economic growth is going in light of the Chinese data, which is playing out in the resource side of things,” said Greg Eckel, who helps manage C$900 million ($857 million) at Toronto-based Morgan Meighen & Associates Ltd. “Yesterday we got a little ahead of the U.S. market and there may be some retracement of that.”
The S&P/TSX dropped 3.7 percent in May, better than all but one of the 24 developed markets in the world. Germany’s DAX Index lost 2.8 percent. Stock markets slumped around the world in May as concern mounted that European austerity measures and Chinese attempts to curb growth will hamper the global economic recovery. The Canadian stock benchmark rose 0.8 percent yesterday when the U.S. market was closed for a holiday.
China’s Purchasing Managers’ Index fell to 53.9, missing the median estimate in a Bloomberg News survey of economists.
Teck Resources Ltd., Canada’s largest base-metals producer, lost 7.3 percent to C$33.87, while Canadian Natural Resources declined C$2.1 to C$35.15. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, fell 4.8 percent to $101.98. EnCana Corp., Canada’s largest natural-gas producer, declined 3.2 percent to $32.18.
Energy producers fell the most as a group in the benchmark index for Canadian stocks as the 53 member S&P/TSX Energy index lost 3 percent.
Gold futures for August delivery gained $11.90, or 1 percent, to $1,226.90 an ounce on the Comex in New York on demand for an alternative to the euro amid concern that the sovereign debt crisis will slow the region’s economic recovery. Earlier, the price touched $1,230.20, the highest since May 17.
Barrick Gold Corp. increased 76 cents to $44.91. Goldcorp Inc., the world’s second-largest producer of the metal by market value, rose 0.3 percent, or 12 cents, to C$45.61.
Construction spending in the U.S. rose in April by the most since 2000 as demand related to the end of a tax credit spurred builders to break ground on more houses. Manufacturing in the U.S. expanded in May for a 10th month as factories continued to help propel the economic recovery.
The Bank of Canada raised its key interest rate to 0.5 percent from 0.25 percent, as predicted by 25 of 27 economists surveyed by Bloomberg News. It was Mark Carney’s first increase as governor and the bank’s first since July 2007.
Excluding one-time items, Scotiabank said it had profit of C$1.04 a share. The bank was forecast to earn 93 cents a share on that basis, based on the average estimate of 11 analysts surveyed by Bloomberg News. The shares rose 2.6 percent to $49.52.
Semafo Inc., the Saint-Laurent, Quebec-based mineral prospector with properties in Africa, jumped 5.1 percent to C$7.28 after reporting that the plant expansion program at its Mana Mine in Burkina Faso is on budget and gold output will be about 40,000 ounces a year.
Nikolaj Gammeltoft in New York at +1-212-617-1061 or firstname.lastname@example.org