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Canadian Stocks Fall on Fed Announcement, China’s Trade Surplus

Canadian stocks fell, as a late-day rally failed to erase losses, after the Federal Reserve’s plan to stimulate the economy wasn’t enough to assuage concern that China’s economy is faltering.

Jaguar Mining Inc. fell the most in the Standard & Poor’s/TSX Composite Index, losing 22 percent. Canadian Natural Resources Ltd. declined 2 percent as oil tumbled to the lowest price in more than a week after data showed China’s import growth and the pace of property-price gains slowed in July. Manulife Financial Corp., Canada’s largest insurer, slumped 1.8 percent as A.M. Best Co. said it might cut its credit rating.

The S&P/TSX lost 25.27 points, or 0.2 percent, to 11,838.29 as of 4:16 p.m. in Toronto. It retreated 1 percent before the Fed said it would purchase Treasuries to help drive when borrowing costs and that the economic recovery will be modest.

“Seeing China’s trade surplus this morning was grounds for caution and hearing the Fed a little more cautious on the overall U.S. economy -- it doesn’t want to make you bullish,” said Greg Taylor, who helps oversee C$4.5 billion ($4.3 billion) at Aurion Capital Management in Toronto. “You could read that as a negative that the government feels it should be there.”

A recovery that is “more modest in the near term than has been anticipated” is prompting the U.S. Fed to reinvest principal payments on mortgage securities it owns into Treasuries, the Federal Open Market Committee said after meeting today in Washington. It’s the central bank’s first attempt to boost growth since March 2009.

Corporate Earnings

The S&P/TSX has gained 0.8 percent this year as U.S. unemployment above 9 percent reduced the impact of stronger-than-forecast corporate earnings. The Thomson Reuters/Jefferies CRB Index of commodities has dropped 3.9 percent, including losses the past four days. Energy and raw-materials companies make up 46 percent of Canadian stocks by market value.

Canadian new home construction fell to its lowest level in seven months in July, Canada Mortgage and Housing Corp. reported today. New housing starts fell 1.6 percent in July to a seasonally adjusted annual pace of 189,200 units on a drop in single-home construction, the housing agency said. Housing starts in June were revised higher to 192,300 units from an initially reported 189,300 units.

Jaguar Mining sank 22 percent to C$6.50. The gold-mining company with operations in Brazil was cut to “sector perform” from “outperform” at RBC Capital Markets.

Cooling Economies

Copper prices fell to a one-week low on concern that cooling economies in the U.S. and China will erode demand for the metal used in pipes and wires.

Lundin Mining Corp., which mines zinc, lead and copper in Europe, slumped 2.6 percent to C$4.19.

Crude oil tumbled to the lowest price in more than a week after the Labor Department reported the productivity of U.S. workers fell in the second quarter, a sign the economy is struggling to recover.

Canadian Natural Resources, the nation’s second-largest oil producer by market value, decreased 2 percent to C$36.13. Canada’s oil sands mining operations are producing vast and fast-growing amounts of mercury, heavy metals, arsenic and other toxic substances, the Globe and Mail reported, citing data released by Environment Canada.

Ivanhoe Energy Inc. posted the second-biggest drop in the S&P/TSX, slumping 6.1 percent to C$1.84. The developer of the Tamarack oil-sands project posted a second-quarter loss of 3 cents a share versus the loss of 1 cent analysts estimated on average in a Bloomberg survey.

Blood Clots

Angiotech Pharmaceuticals Inc. slumped 9.6 percent to 47 Canadian cents. The medical-device maker’s filters used to keep blood clots out of lungs should be removed when they are no longer needed because they may cause complications if left in the body, U.S. regulators told doctors in a posting on a government website.

Research In Motion Ltd. advanced 1.7 percent to C$57.79, helping technology shares rise the most among 10 groups in the S&P/TSX. Saudi Arabia let it continue BlackBerry messaging services and allowed a second deadline -- set for midnight last night -- pass without shutting it down.

Gold futures rose as much as 0.6 percent to $1,209.90 an ounce in New York after the Fed’s announcement. Gammon Gold Inc. advanced 6.7 percent, the most in the S&P/TSX, to C$6.41. Lake Shore Gold Corp. jumped 4.2 percent to C$3.49 and Fronteer Gold Inc. gained 2.4 percent to C$6.93.

Crew Energy Inc. climbed 3 percent to $16.37. The producer of oil and gas in Western Canada posted a second-quarter loss of 3 cents a share excluding some items when analysts were expecting a loss of 6 cents on average in a Bloomberg survey.

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