Canada Stocks Slip on U.S. Jobless Claims: Potash, Banks Fall

Sept. 23 (Bloomberg) -- Canadian stocks fell for a third day, led by raw material shares, after U.S. initial jobless claims unexpectedly increased, signaling slower economic growth in Canada’s biggest trade partner.

Potash Corp. of Saskatchewan Inc. decreased 0.5 percent after Canada extended the deadline to review BHP Billiton Ltd.’s bid for the world’s largest fertilizer producer. Toronto-Dominion Bank slumped 0.5 percent as financial stocks fell after former Federal Reserve Chairman Paul Volcker said the U.S. mortgage market is “absolutely broken.”

The Standard & Poor’s/TSX Composite Index fell 45.47 points, or 0.4 percent, to 12,101.79 in Toronto. The index has dropped 1.1 percent since closing at a four-month high Sept. 20.

“People are taking a bit of time here to reason whether the valuations or the expectations that are built into some of the stocks are reasonable,” said Greg Eckel, who helps oversee C$900 million ($870 million) as a money manager at Morgan Meighen & Associates Ltd. in Toronto. “It’s a real mixed picture.”

The S&P/TSX has underperformed all but three of 23 other developed markets’ equity benchmarks this month, hampered by a decline in energy stocks. Energy companies make up 25 percent of Canadian stocks by market value.

The S&P/TSX fell as much as 0.8 percent earlier today after the U.S. Labor Department reported more new unemployment claims were filed last week than most economists forecast, while an index of euro-area service and manufacturing based on a Markit Economics survey of purchasing managers dropped more than economists estimated.

Home Sales, Confidence

The Canadian benchmark pared its losses after the U.S. National Association of Realtors said purchases of previously owned homes climbed from a record low last month, and the U.S. Conference Board’s index of leading economic indicators gained more than the median forecast.

Potash declined 0.5 percent to C$150.50 after Canada’s Industry Minister Tony Clement said Canada has extended the deadline for reviewing BHP Billiton’s $40 billion takeover offer because the bid is also being studied by the country’s competition bureau. Clement said the review will be “rigorous” and any purchase must deliver “net benefits” to Canada.

Fertilizer companies retreated as corn futures slumped the most in a month and wheat sank to a three-week low. Agrium Inc. lost 2.5 percent to C$75.56.

Teck Declines

Teck Resources Ltd., Canada’s biggest base-metals producer, declined 2 percent to C$39.10.

Bank stocks gained as much as 0.5 percent today, then fell after Volcker, an adviser to President Barack Obama, said changing the government’s role in housing must be a top priority. Toronto-Dominion Bank fell 0.5 percent to C$73.87. Bank of Montreal fell 0.8 percent to C$58.84.

Biovail Corp., Canada’s largest publicly traded drugmaker, jumped 4.2 percent to C$27.70. Shareholders of Biovail and Valeant Pharmaceuticals International are to vote on Sept. 27 on the proposed merger between the companies.

Gabriel Resources Ltd., which is developing a gold and silver mine in Romania, gained 3.8 percent to C$6.27, the highest since at least October 2000. The shares have soared 27 percent since Sept. 16, the day before the company said the mine’s environmental permitting process has resumed.

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.