Canada Stocks Fall as RIM Slumps on Fees, Gold Shares Rally

Canadian stocks fell for a second day as Research In Motion Ltd. plunged after the company decided to scrap service fees for some users, offsetting gains in gold producers.

RIM, which is set to release its BlackBerry 10 line of smartphones early next year, tumbled 27 percent for the biggest drop since 2008. Yamana Gold Inc. and Iamgold Corp. rose at least 2 percent as the price of the metal snapped three days of losses. Stantec Inc., an engineering and architectural services firm, declined 2.9 percent after Raymond James Financial Inc. downgraded the stock.

The Standard & Poor’s/TSX Composite Index fell 3.01 points, or less than 0.1 percent, to 12,385.70 in Toronto. The equity gauge is up 3.6 percent this year, underperforming every developed market in the world except for Spain. Trading volume was 74 percent higher than the 30-day average.

“Gold had been weak because fiscal cliff discussions were progressing,” said Patrick Blais, a fund manager with Manulife Asset Management Ltd. in Toronto. His firm manages about $218 billion. “Now with talks breaking down, it’s not surprising to see gold rebound, given the flight to safety.”

U.S. House Speaker John Boehner yesterday scrapped a vote on his tax plan, which would have allowed higher rates on annual income above $1 million. He said last night that President Barack Obama and Senate Majority Leader Harry Reid should come up with legislation to avoid more than $600 billion in tax-and-spending changes.

Fiscal Cliff

Now that Boehner has pulled his plan, House members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach an agreement.

Yamana added 3.1 percent to C$16.89 and Iamgold rose 2 percent to C$11.10. Gold for February delivery advanced 0.9 percent to settle at $1,660.10 an ounce in New York.

The S&P/TSX Gold subindex rallied 0.8 percent as 18 of 32 members advanced.

RIM slumped 27 percent to C$10.86, its biggest decline since September 2008. Users who do not want enhanced services, including advanced security, are expected to generate “less or no service revenue,” Chief Executive Officer Thorsten Heins said on a conference call yesterday. Service fees accounted for about $982 million in sales last quarter, out of a total of $2.73 billion.

The company posted earnings excluding some items of 22 cents a share, beating the 35-cent loss predicted by analysts.

Stantec, Cogeco

Stantec dropped 2.9 percent to C$39.79. Ben Cherniavsky, an analyst with Raymond James, lowered his rating for the company to market perform from outperform after the stock rose to its highest level since 1994 yesterday. The shares have risen 44 percent this year.

“We remain big believers in Stantec’s long-term prospects but see a less attractive near-term risk/return profile on the stock,” he said in a note to clients today.

Cogeco Cable Inc., a Montreal-based cable television operator, dropped 5.4 percent to C$38.78. The company said it will acquire Peer 1 Network Enterprises Inc. for C$3.85 a share, a 31 percent premium to yesterday’s close. Standard & Poor’s has put Cogeco Cable’s rating on creditwatch with negative implications due to the level of debt in the deal. Peer 1 jumped 30 percent to $3.83.

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