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Canadian Stocks Retreat as U.S. Economy Shrinks, RIM Tumbles

Jan. 30 (Bloomberg) -- Canadian stocks fell, erasing earlier gains, as Research In Motion Ltd. slumped after unveiling its new line of smartphones and a report showed the U.S. economy unexpectedly shrank in the fourth quarter.

RIM tumbled 12 percent, suggesting investors are skeptical the new models can win back customers from Apple Inc. and Google Inc.’s Android. Turquoise Hill Resources Ltd. lost 3.4 percent after Rio Tinto Group said it is considering a temporary halt to construction work at the $6.2 billion Oyu Tolgoi copper and gold project in Mongolia. CCL Industries Inc., a maker of specialty packaging, surged 16 percent after agreeing to buy two businesses from Avery Dennison Corp.

The Standard & Poor’s/TSX Composite Index fell 36.12 points, or 0.3 percent, to 12,794.44 in Toronto, reversing earlier gains of as much as 0.5 percent. The benchmark gauge has advanced 2.9 percent this year.

“I’m surprised with the miss as significant as it is, the markets should be down more than they are,” Gareth Watson, vice president of investment management and research with Richardson GMP Ltd., said from Toronto. His firm manages C$16 billion. “The market is still focusing on individual company earnings.”

The U.S. economy shrank at a 0.1 percent annual rate, the worst performance since 2009, according to a government report today. A decline in government outlays and smaller gain in stockpiles subtracted a combined 2.6 percentage points from growth.

Energy Shares

TransCanada Corp. dropped 1.2 percent to C$48.17 and Suncor Energy Inc. slipped 0.4 percent to C$34.38 as energy companies and banks contributed most to declines in the S&P/TSX. Trading volume was 6.6 percent higher than the 30-day average.

The Bank of Montreal slipped 0.5 percent to C$63.40, its biggest loss since Dec. 27, after the lender said it will repurchase as much as 15 million of its common shares over the next year.

RIM, which changed its name to BlackBerry today, plunged 12 percent to C$13.86. The stock has more than doubled since late September, reflecting optimism that BlackBerry 10 phones can catch on with consumers.

Chief Executive Officer Thorsten Heins introduced two new phones -- the touch-screen Z10 and a model named the Q10 with a physical keyboard. The Z10, which starts at $199 with a wireless contract, will be available on Jan. 31 in the U.K., on Feb. 5 in Canada, and in March in the U.S. The Q10 will follow in the coming weeks, the company said.

‘Nice Run’

Shaw Wu, an analyst with Sterne Agee & Leach Inc., said BlackBerry’s price points for the new phones are not competitive with Android smartphones available at $99, $49 or free. U.S. availability may also be “disappointing to some,” Wu said.

BlackBerry “had a really nice run, now it seems like people are selling on news,” said Bruce Campbell, president of Campbell & Lee Investment Management in Oakville, Ontario. “They got everyone excited and then you can’t buy it for five weeks? That doesn’t make sense.”

Turquoise Hill fell 3.4 percent to C$7.87. Rio Tinto, which owns a majority stake in Turquoise Hill and is co-developing the Oyu Tolgoi project, is considering a halt to construction at the Mongolian site as a protest against demands from the government for a greater share of profit from the mine, according to two people familiar with the matter.

CCL Industries, based in Willowdale, Ontario, soared 16 percent to a record C$53.25. The company agreed to buy Avery Dennison’s office-products business and label-converting unit for $500 million in cash.

Geoffrey Martin, CCL’s chief executive officer, said the acquisition is the largest in the company’s history and bolsters its label offerings. The two units had a combined revenue of $910 million last year, the statement said.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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