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Canada Stocks Fall as Energy, Earnings Offset Housing

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Feb. 7 (Bloomberg) -- Canadian stocks fell, after a two-day gain in the benchmark index, as a slump in energy producers and disappointing earnings offset a report showing building permits rose to a record last year.

Energy shares dropped as crude oil slid 0.8 percent. Teck Resources Ltd. tumbled 6 percent after forecasting weakness in coal markets. Gildan Activewear Inc. fell 4.2 percent after its second-quarter forecast fell short of estimates. Manulife Financial Corp., Canada’s largest insurer, climbed 0.9 percent after beating earnings estimates. BlackBerry jumped 6 percent after adding former executives from Verizon Communications Inc. and Sony Ericsson Mobile Communications AB to its board.

The Standard & Poor’s/TSX Composite Index slipped 5.67 points, or less than 0.1 percent, to 12,755.92 at 4 p.m. in Toronto. About 844 million shares traded hands on Canadian exchanges today, or 11 percent above the three-month average. Four of 10 industry groups in the index declined. The gauge has gained 2.6 percent this year.

“People will be watching near-term earnings more,” Bob McWhirter, fund manager with Selective Asset Management Inc., said in a phone interview. The Toronto-based firm manages about C$3 million ($3 million). One of the focuses will be revenue “because the argument has been that a lot of the rise in earnings has been because of cost cutting, not so much as sales.”

Data today showed Canadian building permits climbed to a record C$80.5 billion in 2012 even as the year ended with sharp back-to-back declines. New home prices rose 2.3 percent in December from a year ago, Statistics Canada said in a separate report.

Oil Producers

Energy producers contributed most to declines in the S&P/TSX. Cenovus Energy Inc., the Calgary-based oil producer, slid 1.4 percent to C$32.90, while Encana Corp., Canada’s largest natural gas producer, fell 2.1 percent to C$19.28.

West Texas Intermediate oil for March delivery dropped 79 cents to $95.83 a barrel on the New York Mercantile Exchange, the lowest level in two weeks. European Central Bank President Mario Draghi said the euro’s strength could hamper an economic recovery, curbing fuel demand.

Teck tumbled the most in the S&P/TSX, dropping C$2.19 to C$34.45. Canada’s largest diversified miner forecast weakness in coal markets until at least the middle of the year. The company’s Chief Executive Officer Don Lindsay said it may consider acquisitions in copper mining to help offset an expected decline in the company’s output of the metal. Shares of the Vancouver-based company have tumbled 17 percent in the past 12 months.

Gildan Activewear, one of the world’s biggest suppliers of t-shirts to makers of printed clothing, sank C$1.52 to C$35. The company, which was the top-performer in the benchmark index in 2012, forecast second-quarter earnings below analysts’ estimates. Gildan said it will be affected by lower net selling prices for its printwear business, short-term manufacturing inefficiencies, the timing of the Easter holiday shutdown, and some cost inflation.

Iamgold, BlackBerry

Iamgold Corp., a producer with mines in Canada, West Africa and South America, advanced 1 percent to C$8.74. The company is considering a share buyback or extra dividend to boost shareholder returns after its stock slumped and it curbed spending on expansion. Iamgold shares have tumbled 48 percent in the past year.

BlackBerry, formerly known as Research In Motion Ltd., rallied 96 Canadian cents to C$16.94. A week after unveiling a new smartphone lineup, the Waterloo, Ontario-based company bolstered its board by adding Dick Lynch, a retired executive video president of Verizon, and Bert Nordberg, the former chief executive officer at Sony Ericsson. The stock has climbed 30 percent this week so far.

T-Mobile USA, the fourth-largest U.S. mobile-service provider, said its tests of the new BlackBerry Z10 are going well and it’s aiming to be the first American carrier “out of the gate” with the phone next month.

Manulife added 13 Canadian cents to C$14.54. The company posted fourth-quarter net income of C$1.06 billion as wealth-management revenue in Asia reached a record. Chief Executive Officer Donald Guloien has said Asian markets including China, Malaysia and Singapore will become the fastest-growing segment of the company’s earnings, due to demand for wealth-management and pension products.

Cineplex Inc., Canada’s largest movie theater operator, jumped 1.6 percent to an all-time high of C$32.97. The Toronto-based company posted record sales and attendance in 2012 with superhero blockbusters such as “Marvel’s The Avengers” and “The Dark Knight Rises.”

To contact the reporter on this story: Sarah Pringle in New York at springle1@bloomberg.net

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

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