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Canadian Stocks Fall as U.S. Fed Launches Asset-Purchase Program

Nov. 3 (Bloomberg) -- Canadian stocks fell the most in a week after the U.S. Federal Reserve said it will buy an additional $600 billion of Treasuries because of “disappointingly slow” economic progress.

Goldcorp Inc., the world’s second-largest gold producer, lost 1.1 percent as the metal retreated. Agrium Inc., Canada’s second-largest fertilizer producer, fell 2.7 percent after missing analysts’ earnings estimates. Copper producer Taseko Mines Ltd. sank 25 percent as the Canadian government denied its plans for a mine in British Columbia.

The Standard & Poor’s/TSX Composite Index decreased 10.3 points, or 0.1 percent, to 12,671.12, remaining below yesterday’s close after the U.S. Fed’s decision on the securities-purchasing program known as quantitative easing.

“The fact that they’ve done it is saying they’re not confident in the economy at this moment,” said Doug Davis, chief executive officer of Davis-Rea Ltd. in Toronto, which manages C$400 million ($394 million). “There will be people who will stay cautious as a result of this and not come back to the market.”

The benchmark had surged 13 percent in the four months ending yesterday as investors anticipated further stimulus to recharge the economic recovery. Most economists in a Bloomberg survey had forecast the Fed would pledge to buy at least $500 billion in securities.

Metals Decline

Gold, silver and copper dropped, indicating some investors had overestimated the Fed’s easing program, said Chyanne Fickes, vice president of investments at Stone Asset Management in Toronto, which oversees about C$800 million.

“People were talking about $100 billion a month,” Fickes said. “That was baked into the market. It turned out to be $75” billion a month.

Goldcorp declined 1.1 percent to C$44.89. Barrick Gold Corp., the world’s largest producer of the metal, lost 1 percent to C$48.68. Yamana Gold Inc., Canada’s fourth-largest producer, decreased 2.4 percent to C$10.86.

Agrium fell 2.7 percent to C$85.59 after its third-quarter profit missed the average analyst estimate by 60 percent, excluding certain items. P.J. Juvekar, an analyst at Citigroup Inc., cut his rating on the shares to “hold” from “buy.”

Taseko Mines slumped 25 percent, the most since 1999, to C$4.94 a day after Canadian Environment Minister Jim Prentice said the government has refused permission for the Prosperity mine. In July, a government panel had said the project would harm fish habitat, navigation and land use by Indian groups.

Gold Buyer

Franco-Nevada Corp., which had agreed to buy 22 percent of the gold produced at Prosperity, fell 3.2 percent to C$34.43.

The S&P/TSX Financials Index rose after the Fed released its statement.

Manulife Financial Corp., North America’s third-largest insurer, gained 2.2 percent to C$12.90 before the release of its second-quarter financial results. Canadian Imperial Bank of Commerce, Canada’s fifth-largest bank, advanced 0.9 percent to C$78.57. Property and casualty insurer Intact Financial Corp. increased 3.8 percent to C$47.37 after announcing third-quarter earnings that beat the average analyst estimate by 38 percent, excluding certain items.

Construction company Aecon Group Inc. tumbled 9.7 percent, the most since 2008, to C$10.97 after its third-quarter earnings excluding certain items missed the average analyst estimate by 62 percent.

Calfrac Climbs

Oilfield-services providers Calfrac Well Services Ltd. and Pason Systems Inc. surged after reporting profit that surpassed analyst forecasts. Calfrac climbed 4.6 percent to C$27.04 after beating the average analyst estimate by 74 percent, excluding certain items.

Pason rallied 5.9 percent to C$12.44 after topping the average forecast by 9.6 percent. The last figure that would have been higher were it not for higher stock-based compensation and taxes, according to Brian G. Purdy, an analyst at National Bank of Canada.

Propane distributor Superior Plus Corp. dropped for a sixth day, sinking 6.1 percent to a 14-month low of C$11.15 after cutting its profit forecasts for 2010 and 2011. The company said it expects to earn C$1.75 a share to C$2 a share next year, down from a range of C$1.85 a share to C$2.05 a share.

Ivanhoe Mines Ltd., which is developing a copper and gold mine in Mongolia with Rio Tinto Group, jumped 6.1 percent to a record C$26.28 after an Aluminum Corp. of China executive said his company wants to participate in the project. Zhao Zhengang, general manager of overseas investment for the state-owned company known as Chinalco, made the comment in an interview with Bloomberg News.

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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