Canadian stocks fell the most in eight weeks as gold producers declined after China unexpectedly raised lending rates and the Bank of Canada said it would stop lifting interest rates in a weakening economy.
Barrick Gold Corp., the world’s largest gold producer, Kinross Gold Corp. and Goldcorp Inc. fell at least 2.6 percent as China increased its lending and deposit rates after inflation accelerated, curbing demand for the metal as an alternative investment. Research In Motion Ltd. dropped 0.9 percent after rival Apple Inc.’s profit forecast fell short of analysts’ estimates.
The Standard & Poor’s/TSX Composite Index slipped 97.46 points, or 0.8 percent, to 12,570.55 as of 4 p.m. in Toronto. The decline was the biggest since Aug. 24.
“This pullback is a healthy thing,” said Paul Ma, who manages C$500 million ($484 million) as a money manager at McLean & Partners in Vancouver. China had to raise rates “because you have to control inflation before it gets out of control. It will hurt commodity prices, but this is nothing to be worried about. After this pullback, we’ll have more money to put back to work again. People should start thinking about stock picking instead of worrying about the macro too much.”
China unexpectedly raised its benchmark rates for the first time since 2007 before a release of data that may show inflation accelerated to the fastest pace in almost two years. The Bank of Canada kept its benchmark interest rate unchanged after three previous increases, saying any further tightening would be “carefully considered” as the economy will take an extra year to reach its full potential. Gold futures fell 2.8 percent, the most since July.
A gauge of materials producers in the S&P/TSX dropped 2.6 percent, the most since July 2, as mining companies accounted for 9 of the 10 biggest declines in the benchmark index. Gold companies make up 11 percent of Canadian stocks by market value, according to Bloomberg data. The S&P/TSX has gained five straight weeks, the longest streak since April 2009, as gold surged to a record.
Barrick Gold slipped 3.3 percent to C$46.91. Kinross Gold, Canada’s third-largest gold producer, dropped 3.9 percent to C$18.28. Goldcorp, the second-largest, declined 2.6 percent to C$43.45.
Osisko Mining Corp. plunged 7.3 percent to C$14.67 for the biggest decline in the S&P/TSX. Silver Standard Resources Inc. slumped 7.2 percent to C$23.55 as silver dropped 2.6 percent, the most since July. Oceanagold Corp. fell 7.1 percent to C$3.52. New Gold Inc. declined 6.7 percent to C$6.68. Silvercorp Metals Inc. fell 6.5 percent to C$8.96. Great Basin Gold Ltd. slipped 6.5 percent to C$2.61.
Research In Motion, maker of the BlackBerry smartphone, fell 0.9 percent to C$48.82 after Apple lowered its profit forecast and Chief Executive Officer Steve Jobs dismissed the threat of rivals. Apple said profit for the current quarter will be about $4.80 a share, which includes the year-end holiday shopping season, less than the $5.03 predicted by analysts, as supply constraints hamper sales of the iPad.
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, advanced 2.1 percent to $148.40. Yara International ASA said it will probably team up with a partner in order to buy potash and phosphate assets.
Premium Brands Holding Corp. gained 1.8 percent to C$14.20. The food distributor and manufacturer said it bought Seattle-based sandwich and wrap maker SK Food Group Inc. The company’s 12-month price estimate was raised to C$16 from C$15.50 and its rating was lifted to “buy” at Laurentian Bank Securities by equity analyst Vincent Perri, citing the acquisition.