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Canadian Stocks Fall as Banks Drop on U.S. Job, Factory Reports

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June 1 (Bloomberg) -- Canadian stocks fell the most in nine months, led by financial and energy companies, after private reports showed growth in U.S. employment and manufacturing slowed last month.

Canadian Imperial Bank of Commerce, the country’s fifth-largest lender by assets, dropped 3.5 percent after an analyst at Royal Bank of Canada cut his rating on the shares. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, lost 4 percent as oil futures retreated. BlackBerry maker Research In Motion Ltd. declined 5.1 percent after UBS AG named it a “least-preferred” stock.

The Standard & Poor’s/TSX Composite Index decreased 275 points, or 2 percent, to 13,527.88 after the Institute for Supply Management’s index of U.S. manufacturing dropped to its lowest level since September 2009. The May figure trailed 82 of 83 economists’ forecasts in a Bloomberg survey.

“This is a further confirmation of a slowing down of the economy,” said Sebastian van Berkom, a money manager at Van Berkom & Associates in Montreal, which oversees C$1.6 billion ($1.6 billion). “The statistics are coming down below estimates, therefore the market reacts negatively.”

The index yesterday completed its third-straight monthly loss, the longest streak since February 2009. Indexes of S&P/TSX energy and materials stocks slumped 4.5 percent and 5.9 percent, respectively, in May as crude futures sank 9.9 percent and silver plunged 21 percent while the U.S. dollar climbed for the first time since November. Energy and raw-materials companies make up 49 percent of Canadian stocks by market value, according to Bloomberg data.

Slow Hiring

ADP Employer Services said today that U.S. employers added 38,000 jobs last month, missing the median estimate 175,000 in a Bloomberg survey of economists.

Also today, Moody’s Investors Service cut its credit rating on Greek bonds to Caa1 from B1, and JPMorgan Chase & Co. reduced its forecast for U.S. second-quarter economic growth to an annualized rate of 2 percent from 2.5 percent.

An index of S&P/TSX financial stocks declined the most since August. Toronto-Dominion Bank, Canada’s second-largest lender by assets, fell 3.2 percent, the most in a year, to C$80.81. Royal Bank, its bigger rival, decreased 2.9 percent to C$54.98. Manulife Financial Corp., North America’s fourth-largest insurer, slid 4.8 percent to C$16.44.

CIBC retreated 3.5 percent to C$77.54 after Andre-Philippe Hardy, an analyst at Royal Bank, cut his rating to “sector perform” from “outperform.” The lender has the most to lose among Canadian banks from a slowdown in domestic consumer lending, Hardy wrote in a note to clients.

The S&P/TSX Energy Index fell for the first time in six days as crude oil dropped the most in three weeks and natural gas futures declined.

Encana, Cenovus

Encana Corp., Canada’s largest nautral gas producer, lost 2.6 percent to C$32.15. Cenovus Energy Inc., the country’s fifth-biggest energy company, declined for the first time in eight days, decreasing 4.4 percent to C$34.21. Canadian Natural retreated 4 percent to C$40.48.

Corridor Resources Inc., which explores for oil and gas in eastern Canada, plunged 25 percent to an 18-month low of C$3.18 after saying Apache Corp. has pulled out of a shale-gas joint venture in New Brunswick.

Oilfield services company Trinidad Drilling Ltd. fell 6 percent, the most in nine months, to C$10.29 after reporting profit and sales that missed analyst estimates.

Base-metal and coal producers dropped as copper declined. Teck Resources Ltd., Canada’s largest company in the industry, lost 3.7 percent to C$48.94. Northern Dynasty Minerals Ltd., Anglo American Plc’s partner in the Pebble project in Alaska, decreased 5.9 percent to C$11.55.

Profit Miss

Reitmans (Canada) Ltd., which owns the country’s biggest chain of women’s clothing stores, tumbled 7.2 percent, the most in 25 months, to C$16.47 after reporting first-quarter profit of 1 Canadian cent a share, excluding certain items. Two analysts had estimated earnings of 23 Canadian cents a share and 24 Canadian cents a share, respectively.

RIM, Canada’s largest technology company, slumped 5.1 percent to C$39.23 after closing at a four-year low yesterday. In a note to clients, Amitabh Passi, an analyst at UBS, said increasing competition in the smartphone market may reduce profit margins.

Intact Financial Corp., Canada’s biggest property and casualty insurer, soared 9.7 percent to more than a four-year high of C$54.62 after agreeing to buy Axa SA’s Canadian unit for C$2.6 billion. The purchase will increase Intact’s premiums by C$2 billion to more than C$6.5 billion, the company said in a statement.

Sino-Forest Corp., a forestry company with operations in China, dropped 5.5 percent to C$18.21 after a purchasing managers’ index for the country showed manufacturing grew at the slowest pace in nine months in May.

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