Canadian Stocks Fall as Gold Drops From Record; Oil Shares Gain

Canadian stocks fell for the first time in seven days as declines by gold producers outweighed a rise in oil and base-metal shares after U.S. President Barack Obama agreed to extend tax cuts.

Kinross Gold Corp., Canada’s third-biggest gold producer, dropped 2.7 percent as the metal retreated from a record. Suncor Energy Inc., the country’s largest oil company, gained 1.6 percent as Obama agreed to support a two-year extension of Bush-era tax rates for high-income taxpayers. Bank of Nova Scotia, Canada’s third-largest lender by assets, declined 2 percent after surging 4 percent over the previous two days.

The Standard & Poor’s/TSX Composite Index slipped 25.34 points, or 0.2 percent, to 13,250.67. The Canadian equity benchmark’s six-day streak was the longest stretch of advances since September.

“Copper versus gold is the trade,” said Marcus Xu, director of equity investments at Genus Capital Management in Vancouver, which manages C$1.7 billion ($1.69 billion). “The market is net down because gold is a very big weight in the index now. Plus, gold was trading at an all-time high. Whenever you have a new high come up, people always want to take a step back and take some profits.”

The Canadian benchmark has gained 2.3 percent this month as the U.S. dollar has fallen 1.5 percent against a basket of world currencies, boosting commodity prices. S&P/TSX gold stocks jumped 3.2 percent during the period as the U.S. reported a smaller increase in jobs than most economists forecast, raising the prospect of more government or central-bank stimulus.

Gold Shares Slump

The S&P/TSX Gold Index slumped the most in four weeks today as the metal decreased 0.5 percent from a record close.

Kinross lost 2.7 percent to C$18.84. Goldcorp Inc., the world’s second-biggest producer by market value, retreated 1.7 percent to C$47.36.

Centerra Gold Inc. and European Goldfields Ltd. slumped after analysts reduced their ratings on the shares.

Centerra, which mines in Kyrgyzstan and Mongolia, fell 7.1 percent from a record close to C$21.35 after Sabrina Grandchamps, an analyst at HSBC Holdings Plc, cut her rating on the company to “underweight” from “neutral.” European Goldfields, which explores for precious and base metals in Greece and Romania, tumbled 9.4 percent to C$13.27 after a downgrade to “sector perform” from “outperform” by Stephen D. Walker, an analyst at Royal Bank of Canada.

Energy Stocks Gain

Energy companies gained the most of 10 industry groups in the S&P/TSX today after President Obama said he’ll accept a deal to extend current tax rates for high-income taxpayers for two years in exchange for extending federal unemployment insurance for the long-term jobless and cutting the payroll tax by $120 billion for one year.

Suncor advanced 1.6 percent to a 10-month high of C$36.66. TransCanada Corp., owner of Canada’s largest pipeline system, increased 1.1 percent to C$38.02.

An index of base-metal and coal producers gained for a sixth day after Toronto-Dominion Bank raised its price estimate for copper by 17 percent for 2011.

First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, rallied 5.8 percent to C$105.30 after Greg Barnes, an analyst at TD, boosted his rating on the stock to “buy” from “hold.” Inmet Mining Corp., which produces copper, gold and zinc, advanced 4.1 percent to C$72.86 after Barnes raised his 12-month share-price estimate to C$86 from C$76.

Coal Producer

SouthGobi Resources Ltd., which produces coal in Mongolia, plunged 8.3 percent to C$12.78. Shares of the Vancouver-based company had jumped 15 percent yesterday after it announced its biggest-ever sales contract.

The S&P/TSX Banks Index climbed for the first time in four days. TD, Canada’s second-largest lender by assets, rose 1.9 percent to C$72.17. The shares gained after Chief Financial Officer Colleen Johnston, when questioned about a possible bid for U.S. auto-loan company Chrysler Financial Corp., said the bank is looking at more “modest-sized” deals.

Bank of Montreal, Canada’s fourth-biggest bank, rallied 3.1 percent to C$61.87 after reporting fourth-quarter earnings that beat the average of 13 analyst estimates by 3.7 percent, excluding certain items.

Scotiabank fell 2 percent from a record close to C$55. The shares had rallied after the company said on Dec. 3 it will aim to pay out 40 percent to 50 percent of its profits in dividends, up from 35 percent to 45 percent.

Scotiabank’s price per dollar of analysts’ estimated profit over the next 12 months reached the highest level in two years of Bloomberg records yesterday relative to Canada’s six largest banks.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, slipped 1.8 percent to C$143.23. Wheat futures fell the most in three weeks after Australia raised its forecast for domestic production.

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