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Canadian Stocks Decline as Concern Over European Debt Mounts

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Canadian stocks fell, led by banks and insurers, as European bond yields rose on concern over budget deficits.

Bank of Montreal, Canada’s fourth-biggest lender by assets, retreated 1.2 percent as financial companies slumped for a third day. Canadian Tire Corp., the country’s fifth-largest retailer by market value, advanced 6.8 percent after reporting per-share earnings that topped the average analyst estimate by 21 percent, excluding certain items. Pacific Rubiales Energy Corp., which produces oil and gas in Colombia, dropped 3.8 percent after Alexander Klein, an analyst at DundeeWealth Inc., cut his rating on the stock to “neutral” from “buy.”

The Standard & Poor’s/TSX Composite Index fell 7.9 points, or 0.1 percent, to 12,934.74 as Irish and Spanish government bonds each declined for a 13th day after French Foreign Minister Christine Lagarde said investors must share in the cost of safeguarding sovereign debt.

“The biggest impact would be with respect to the European financials, the largest banks over there that are the largest holders of Euro zone debt,” said Philip Petursson, managing director of the Portfolio Advisory Group at MFC Global Investment Management in Toronto, which manages about C$287 billion ($285 billion). “However, it would spread to other financials around the world. If we’re seeing a selloff in one area of financials, take financials off across the board.’”

The S&P/TSX dropped 3.9 percent in the first half of the year, in part on concern a European debt crisis would derail the global recovery. Since then, the benchmark has jumped 15 percent, led by raw-materials producers, as commodities have surged on speculation central-bank stimulus measures would weaken the U.S. dollar.

Banks, Insurers

Royal Bank of Canada, the country’s largest bank, slipped for a fourth day, losing 1 percent to C$53.70. BMO decreased 1.2 percent to C$58.52. Sun Life Financial Inc., Canada’s third-biggest insurer, retreated 0.9 percent to C$29.04.

Base-metals producers climbed as copper rallied to a record after China, the world’s biggest user of the metal, reported a 13.1 percent year-over-year increase in industrial production for October.

Teck Resources Ltd., Canada’s biggest base-metals and coal producer, rose 4.1 percent to a two-year high of C$50.35 after Meredith H. Bandy, an analyst at BMO, raised her share-price estimate to C$50 from C$46. First Quantum Minerals Ltd., the country’s second-largest publicly traded copper producer, gained 3.1 percent to C$93.80.

Pacific Rubiales Falls

Pacific Rubiales declined for a fifth day, slumping 3.8 percent to C$30.90. On Nov. 9, the company reported third-quarter profit that trailed the average analyst estimate by 55 percent, excluding certain items.

BlackPearl Resources Inc., which produces oil in Canada, surged 9.9 percent from a three-year high to C$5.10 after announcing the results of an independent resource assessment on its core properties. At least nine analysts raised their share-price estimates on the company, moving the average 12-month forecast to C$5.93 from C$4.60 last week.

Nuvista Energy Ltd., another Canadian energy producer, led the S&P/TSX with a 4.3 percent decrease to C$9.45 after at least four analysts reduced their share-price estimates on the stock. Grant Hofer, an analyst at National Bank of Canada, cut his forecast to C$11.50 from C$13.50, citing “a more moderate growth outlook over the next 12 months.”

Centerra Gold Inc., which mines in Kyrgyzstan and Mongolia, advanced for the first time in five days, increasing 6.1 percent to C$18. The company had tumbled 17 percent this month through yesterday. It reported a third-quarter loss on Nov. 5.

Canadian Tire surged 6.8 percent, the most since 2008, to C$62.93. The company raised its quarterly dividend 31 percent to 27.5 cents a share as of the dividend payable March 1.

CML Healthcare Income Fund, which operates medical-imaging and laboratory-testing clinics, lost 3.6 percent to C$11.76. The company announced third-quarter earnings of 23 cents a share, excluding certain items, compared with analyst forecasts of 25 cents a share and 27 cents a share.

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