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Canada Stocks Decline as Gold Shares Drop on U.S. Economic Data

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Oct. 15 (Bloomberg) -- Canadian stocks fell, paring a weekly gain, as gold producers declined after data on U.S. retail sales and manufacturing surpassed economists’ forecasts.

Barrick Gold Corp., the world’s largest producer of the metal, lost 1.1 percent as the U.S. dollar rose against the euro for the first time in four days. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, dropped 1 percent after Reuters reported that Sinochem Group won’t try to outbid BHP Billiton Ltd. for the company. Royal Bank of Canada, the country’s largest bank, increased 0.7 percent as lenders climbed.

The Standard & Poor’s/TSX Composite Index slipped 10.62 points, or 0.1 percent, to 12,609.07. For the week, the index advanced 0.6 percent.

“We had a huge run in September and the third quarter in general,” said Murray Leith, who helps manage C$6.5 billion ($6.43 billion) as a money manager at Odlum Brown Ltd. in Vancouver. “You’ve got to expect a period of consolidation after a big run. Once people realize the economy is not going to fall off the rails, more people will venture back into the stock market.”

The S&P/TSX has gained five weeks in a row for the first time since April 2009. The index has rallied 4.2 percent during the streak, led by raw-materials companies. An index of commodities has climbed 7.6 percent as the U.S. dollar weakened on concerns that new Federal Reserve stimulus measures will weaken the currency.

Canadian Factories

Canadian factory sales increased 2 percent in August, Statistics Canada said today. Sales gained faster than they had in 13 months and four times more than the median forecast of 13 analysts in a Bloomberg survey.

In the U.S., retail sales advanced 0.6 percent in September, the Commerce Department said today in Washington, topping the median economist estimate of 0.4 percent. An index of manufacturing in the New York region from that area’s Federal Reserve bank climbed to more than twice the level forecast by economists.

The increase in sales volume didn’t lead to higher consumer prices. The U.S. consumer-price index rose 0.1 percent last month, the Labor Department said today. Most economists in a Bloomberg survey had forecast an increase of at least 0.2 percent.

Gold futures dropped 0.4 percent from a record high as the U.S. dollar gained against 14 of 16 other major currencies.

Barrick slipped 1.1 percent to C$48.53. Yamana Gold Inc., Canada’s fourth-largest gold producer, declined 2.5 percent to C$11.42. Kinross Gold Corp., the No. 3 producer by revenue, lost 1.3 percent to C$19.20.

Osisko Jumps

Osisko Mining Inc., which is developing a gold mine in Quebec, jumped 5.6 percent to a record C$15.56 a day after announcing drilling results it said “suggest there is excellent potential to discover new, higher-grade ore.” Osisko has soared 84 percent this year and is now the eighth-largest company by market value in the S&P/TSX Gold Index without having mined an ounce.

Potash Corp. decreased 1 percent to C$146.78 after Reuters, citing people with knowledge of the matter whom it didn’t identify, said Sinochem has walked away from efforts to put together a takeover offer.

Last week, two people with knowledge of the matter said Sinochem, China’s largest fertilizer trader, may struggle to get state financial backing for a takeover.

Taseko Mines Ltd., which produces copper in British Columbia, surged 9.8 percent to C$6.82 after plunging 11 percent yesterday. The company said yesterday it was “unaware of any information that would cause the price of the company’s stock to change materially.”

Financials

Most financial stocks climbed, extending the S&P/TSX Financials Index’s gain since Aug. 31 to 5.7 percent. Royal Bank rose 0.7 percent to C$55.55. Canadian Imperial Bank of Commerce, Canada’s fifth-largest bank, advanced 0.7 percent to C$77.27, the highest since 2007. Money manager CI Financial Corp. increased 3.4 percent, the most in nine months, to C$21.41.

Questerre Energy Corp., which is developing a shale-gas project in Quebec, sank 14 percent to a 13-month low of C$1.67. The company and Talisman Energy Inc. delayed a plan for two shale-gas test wells by at least six months, the Globe and Mail reported.

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net.

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

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