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Canada Stocks Fall, Erasing a Weekly Gain, as Commodities Drop

May 31 (Bloomberg) -- Canadian stocks fell, erasing a weekly gain, as declines in metals and crude oil dragged down raw-materials producers and U.S. consumer spending unexpectedly slumped in April.

Teck Resources Ltd. and First Quantum Minerals Ltd. lost at least 2.1 percent as copper fell ahead of a report that may show China’s manufacturing is close to contracting. BCE Inc. fell 0.4 percent after a government agency said it will introduce a code of conduct for the wireless carrier industry. Canadian Natural Resources Ltd. dropped 3.3 percent as crude headed for a second weekly decline.

The Standard & Poor’s/TSX Composite Index fell 96.13 points, or 0.8 percent, to 12,650.42 at 4 p.m. in Toronto. The index dropped 0.1 percent in the past five days for its first losing week since April 19. Trading volume was 41 percent higher than the 30-day average.

“There some nervousness about general market levels and anything that happens south of the border gets magnified up here,” David Cockfield, fund manager with Northland Wealth Management, said from Toronto. He helps manage C$225 million ($218 million) with the firm. “Materials are so volatile right now. The utilities and pipelines have been taking a beating for a while. I think it’s an overreaction, we need to see interest rates really go up before I lose interest.”

U.S. household purchases, which account for 70 percent of the economy, dropped 0.2 percent, after a 0.1 percent rise the previous month, a Commerce Department report showed today. Economists surveyed by Bloomberg had projected no change. The U.S. is Canada’s largest trading partner.

Economic Growth

Canada’s economy in the first quarter grew at a 2.5 percent annualized pace, the fastest in six quarters, Statistics Canada said today from Ottawa. Economists surveyed by Bloomberg had forecast a 2.3 percent quarterly increase, the median of 24 estimates.

Raw-materials stocks fell 0.6 percent as a group, as nine of 10 industries retreated in the S&P/TSX.

Teck Resources lost 3.2 percent to C$27.69 and First Quantum Minerals fell 2.1 percent to C$18.56. Copper slid 0.7 percent to settle at $3.2925 a pound in New York.

China’s official Purchasing Managers’ Index tomorrow will show a final reading for May of 50, down from 50.6 in April and on the line between growth and contraction, economists surveyed by Bloomberg said.

Silver Standard Resources Inc. lost 2.2 percent to C$8.18 and Silver Wheaton Corp. declined 1.9 percent to C$24.59 as the price of the metal fell 2 percent for the biggest loss since May 15.

Canadian Natural Resources slipped 3.3 percent to C$30.90 and Enbridge Inc. lost 1.9 percent to C$44.97 as crude retreated 1.8 percent to a one-month low in New York.

Telephone Stocks

BCE slipped 0.4 percent to C$46.59 after the Canadian Radio-television and Telecommunications Commission said yesterday it will issue a code of conduct on June 3 that may impose checks on fees, including charges for canceling contracts with wireless carriers. The new guidelines would also apply to companies including Rogers Communications Inc. and Telus Corp.

Bank of Nova Scotia, Canada’s third-largest lender, lost 0.3 percent to C$59.04 after announcing CEO Richard Waugh will retire on Nov. 1, to be replaced by President Brian Porter. Waugh, who joined the company 43 years ago as a teller, will serve as deputy chairman of the board until Jan. 31, the company said in a statement.

Rainy River

Rainy River Resources Ltd. surged 35 percent to C$3.64 after agreeing to be acquired by New Gold Inc. for C$381.9 million ($370.4 million) to add a 4 million-ounce reserve in Ontario. New Gold plunged 8.7 percent to C$7.05.

CVTech Group Inc., a maker of transmission systems based in Drummondville, Quebec, jumped 20 percent to C$1.48 before trading was halted. A shareholder yesterday released a letter saying two non-public offers by an electrical contractor were declined this year. The proposals valued the company as high as C$1.95 a share.

Mediagrif Interactive Technologies Inc., which operates e-commerce marketplaces, jumped 11 percent to C$20.69 after agreeing to buy the online labor recruitment website Jobboom and online dating site Reseau Connect from Quebecor Inc. for C$65 million.

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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