Canada Stocks Trim Best Monthly Gain in 2 Years as Miners Slump

Canadian stocks fell, trimming the benchmark gauge’s best monthly gain in two years, as miners dropped on concern the Federal Reserve may taper stimulus sooner than anticipated and investors assessed corporate results.

Endeavour Silver Corp. and China Gold International Resources Corp. each dropped more than 7 percent as prices for the precious metals retreated. Valeant Pharmaceuticals International Inc. sank 3.7 percent after lowering its full-year revenue forecast. Bombardier Inc. slid the most in more than four years after posting a quarterly profit that missed analysts’ estimates.

The Standard & Poor’s/TSX Composite Index lost 94.07 points, or 0.7 percent, to 13,361.26 at 4 p.m. in Toronto. The benchmark Canadian equity gauge rose 4.5 percent in October to cap its fourth straight monthly gain.

“There’s a slight possibility they could start tapering off a little bit in December, so the market is reacting negatively to that,” Paul Gardner, portfolio manager at Avenue Investment Management, said by phone from Toronto. He helps manage C$300 million ($290 million). “Earnings season is decent. Nothing stellar but nothing horrible.”

The U.S. central bank yesterday maintained $85 billion in monthly bond purchases, saying that while the economy shows signs of “underlying strength” it needs to see more evidence of sustainable improvement before scaling back.

Taper Timing

Economists at Citigroup Inc. and Barclays Plc said yesterday’s policy statement opens the possibility of reduced bond purchases as soon as December. The odds of a taper in January rose to 45 percent, from 25 percent before the decision, according to Citigroup. Economists surveyed by Bloomberg Oct. 17-18 had predicted the Fed would pare stimulus in March.

In Canada, gross domestic product grew faster than economists forecast in August on record extraction of oil and natural gas. Output is on pace to quicken to about a 2.5 percent annualized pace this quarter according to economists at CIBC World Markets and TD Securities, the fastest since a 6.2 percent gain two years ago.

The Bank of Canada last week predicted third-quarter growth at a 1.8 percent pace, after it slowed to 1.7 percent in the April-to-June period on energy exports and business investment.

Materials Slump

Nine of 10 industries in the benchmark gauge declined. The S&P/TSX Materials Index plunged 2.9 percent, the most in six weeks, as the price of gold headed for the biggest loss in almost three weeks and silver slumped the most in more than a month.

Endeavour Silver plunged 8.3 percent to C$4.33, its biggest drop in more than a month, and China Gold fell 7 percent to C$2.80, pacing declines among mining companies.

Barrick Gold Corp. fell 5.8 percent to C$20.28. The company said it will temporarily suspend construction at its $8.5 billion Pascua-Lama mine on the Argentina-Chile border as the world’s largest gold producer tries to conserve cash after prices slumped. The miner also reported quarterly results that topped estimates.

After the market closed, Barrick said it will sell about $3 billion in shares and use the proceeds to pay down debt.

Barrick was among 14 members of the S&P/TSX scheduled to report third-quarter results today.

Quarterly Results

Valeant Pharmaceuticals dropped 3.7 percent to C$110.15, the biggest drop since August. Canada’s largest pharmaceutical company now expects full-year revenue of as much as $5.59 billion. Its prior forecast topped out at $6.2 billion.

Bombardier slid more than 10 percent to C$4.74, its steepest slide since March 2009. The world’s third-largest planemaker delivered fewer aircraft and collected less revenue in the last quarter.

First Quantum Minerals Ltd. added 2.3 percent to C$19.78, the highest level since March. The miner said third-quarter production beat estimates and raised the upper end of its estimated gold production for 2013. The company lowered its expected cost of production for copper and nickel.

Stantec Inc. jumped 6.6 percent, the most in the benchmark index, to a record C$61.96. The engineering services firm’s earnings and revenue topped analyst estimates.

Methanex Corp. climbed 4.4 percent to C$60.47. The methanol maker reported higher earnings and said demand for its products remains “healthy.”

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