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Canadian Stocks Fall for First Week in Six as Banks Decline

Canadian stocks completed their first weekly decline since Sept. 10 as Shaw Communications Inc. missed profit forecasts and an index of banks dropped the most in eight weeks.

Royal Bank of Canada, the biggest Canadian company by market value, lost 1.8 percent from yesterday’s unadjusted close, trading for the first time without the right to a 50 cent dividend. Shaw, Canada’s largest cable and satellite television provider, decreased 5.7 percent after reporting earnings that missed the average analyst estimate by 17 percent. Base-metals producer Lundin Mining Corp. climbed 7 percent after the Democratic Republic of Congo confirmed a joint venture’s mining contract.

The Standard & Poor’s/TSX Composite Index increased 1.95 points, or less than 0.1 percent, to 12,601.18. The index slipped 0.1 percent this week after climbing 4.2 percent from Sept. 10 through Oct. 15.

“Because a parabolic rise will generally lead to a major crash, having things level off or retreat slightly, it’s indicative of a healthier market as opposed to an irrational market,” said Steven Conville, who helps manage C$8 billion ($7.94 billion) at Macquarie Private Wealth Inc. in Markham, Ontario.

The S&P/TSX’s streak of five-straight weekly gains was the longest since April 2009. The Thomson Reuters/Jefferies CRB Commodity Price Index surged 7.6 percent during the period as the U.S. dollar declined on speculation central-bank stimulus measures will weaken the currency.

Bank Valuation

The S&P/TSX Banks Index dropped 1.1 percent two days after almost touching a three-year high in price per dollar of estimated profit.

“Canadian financials are right at valuation, and I mean not a dollar higher would be justified at this time,” Conville said. “I don’t care how many times they’ve increased their dividend or how good their balance sheet is, you can’t tell me banks are healthier than they were in 2005.”

Royal Bank declined 1 percent to C$55.76, adjusted for the dividend. Bank of Nova Scotia, Canada’s third-largest lender by assets, lost 1.4 percent to C$54.55. Canadian Imperial Bank of Commerce, the No. 5 bank, decreased 1.4 percent to C$78.17.

Shaw retreated 5.7 percent, the most in almost two years, to C$22.12 after saying it earned 28 cents a share excluding some items in the fourth quarter, trailing the average analyst estimate by 17 percent, the most since at least 2005. The company also said Chief Executive Officer Jim Shaw will resign effective Jan. 13 and be replaced by his brother Bradley.


Lundin Mining jumped 7 percent to C$6.75 after soaring 11 percent yesterday for its biggest two-day gain in 17 months. The Tenke Fungurume copper project, a joint venture with Freeport-McMoRan Copper & Gold Inc., reached an accord with the Congolese government over the African country’s stake in the project. The country had been reviewing all of its deals with foreign mining companies to see if they were unfair to the state.

Fraser Phillips, an analyst at Royal Bank of Canada, raised his rating on Lundin Mining to “outperform” from “sector perform,” while Onno Rutten, an analyst at UBS AG, boosted the shares to “buy” from “neutral.”

Copper producer First Quantum Minerals Ltd., which is trying to regain control of its largest copper projects in Congo through international arbitration, gained 0.9 percent to C$83.45. Anvil Mining Ltd., an Australian copper-mining company that operates in Congo, surged 14 percent from a two-year high to C$4.84.

Pipeline Controversy

TransCanada Corp., owner of Canada’s largest pipeline system, decreased 1.1 percent to $38.54 after Associated Press reported two U.S. senators criticized Secretary of State Hillary Rodham Clinton for saying she was “inclined” to back the company’s Keystone XL pipeline. TransCanada is seeking U.S. approval to build the link from Alberta to Port Arthur, Texas.

Gold producers advanced as the metal rebounded in post-settlement trading after its biggest weekly retreat in three months.

Barrick Gold Corp., the world’s largest producer, increased 1.4 percent to C$47.26. Eldorado Gold Corp., Canada’s fifth-biggest gold-mining company by market value, climbed 2.1 percent to C$17.27. European Goldfields Ltd., which mines in Greece, surged 7.3 percent to C$14.02 to extend its October gain to 29 percent.

Aurizon Mines Ltd., which produces gold in Quebec, sank 7.9 percent, the most in 10 months, to C$6.32 after cutting its 2010 production forecast. The company blamed “challenging ground conditions” as well as mechanical issues with mining equipment.

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