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Canadian Stocks Decline Amid Concern Commodities Rally Will End

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May 10 (Bloomberg) -- Canadian stocks retreated, with the Standard & Poor’s/TSX Composite Index declining for the first time in three days, as energy and metal producers fell on concern about the sustainability of a rally in commodities.

Suncor Energy Inc., Canada’s largest oil and gas producer, declined 0.1 percent as crude oil advanced to a four-day high on concerns that flooding of the Mississippi River will disrupt fuel output. Teck Resources Ltd., Canada’s largest base-metals and coal producer, lost 1.7 percent. North American Palladium Inc., a precious-metal producer in Ontario, slid 27 percent after reporting a first-quarter loss.

The Standard & Poor’s/TSX Composite Index, which rallied the past two days, dropped 35.07 points, or 0.3 percent, to 13,642.06 in Toronto. The Thomson Reuters/Jefferies CRB Commodity Price Index rose 1.3 percent, continuing a rebound from its biggest weekly drop since 2008.

“Commodities have gotten ahead of the equity markets,” said Ken Mack, an analyst and trader at Stone Asset Management in Toronto, which oversees about C$850 million ($881 million). “We’re seeing commodities bounce back. Gold’s back up from the bottom. Equity investors don’t believe in the commodity prices. There’s a lot of scare in the equity markets.”

The S&P/TSX has lost 3.4 percent this quarter, more than all other benchmark stock indexes for developed markets except the Athens Stock Exchange General Index. Oil is up 35 percent from a year ago, and has gained 6.9 percent in the past two days. Gold rose a third day, advancing 0.9 percent today to $1,516.90 an ounce on the Comex in New York.

Flood Waters

Oil fell as much as 2.4 percent early in the day after CME Group Inc. increased the amount of money traders must hold as collateral for their crude, gasoline and heating oil transactions, effective after the close of business today. Futures recovered as flood waters moved south from Memphis, threatening refineries and shipping traffic.

Suncor Energy fell 0.1 percent to C$40.58. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, lost 1.9 percent to C$41.35.

Goldcorp Inc., the world’s second-biggest producer of the metal by market value, declined 1.6 percent to C$47.57. Teck dropped 1.7 percent to C$48.13. North American Palladium lost 27 percent to C$3.98 after reporting a first-quarter loss of 6 Canadian cents a share, excluding certain items. Analysts, on average, forecast a profit of 1 Canadian cent a share, according to a Bloomberg survey.

Health-care stocks climbed, as pharmacy-benefits manager SXC Health Solutions Corp. rose 2 percent to C$59.11. Financial, technology and health-care stocks offer “value,” Bill Miller, the chairman and chief investment officer of Legg Mason Capital Management Inc., wrote in the Financial Times today. He said valuations in those industries have been more expensive 90 percent of the time during about the past 60 years.

George Weston Ltd., the majority owner of Loblaw Cos., Canada’s biggest grocery chain, fell 1.8 percent to C$69.65 after reporting first-quarter sales that fell 0.8 percent short of analyst estimates, according to Bloomberg data.

To contact the reporters on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net; Jeff Sutherland in New York at jsutherlan13@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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