Canadian Stocks Slump Most in Three Months on Materials

Canadian stocks slumped the most in three months as raw-material producers fell amid disappointing earnings and a drop in commodity prices, overshadowing faster-than-estimated expansion in the nation’s economy.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, fell 1.9 percent after forecasting first-quarter profit that trailed analysts’ estimates. BlackBerry, formerly known as Research in Motion Ltd., dropped 6.8 percent after Credit Suisse downgraded it to underperform. Goldcorp Inc. and Barrick Gold Corp. fell at least 2.2 percent after the metal slid the most in almost four weeks.

The Standard & Poor’s/TSX Composite Index retreated 109.20 points, or 0.9 percent, to 12,685.24 at 4 p.m. in Toronto. The S&P/TSX has risen 2 percent this year, the fourth-worst performance among the world’s 24 developed markets, according to data compiled by Bloomberg. The main equity benchmark for stocks in Israel has fallen 0.7 percent, Belgium’s equities rose 1.8 percent and Austrian shares added 1.9 percent.

“Everyone’s focused on earnings,” Anil Tahiliani, fund manager at Calgary-based McLean & Partners Wealth Management Ltd., which has C$900 million in assets, said in a phone interview. “We’re getting mixed signals from companies regarding forward guidance. Having a pullback is not surprising.”

About 81 percent of the 16 companies in the S&P/TSX that have released results so far in this reporting season have exceeded profit projections. Forty percent have surpassed sales estimates, according to data compiled by Bloomberg.

Canada’s GDP

Canada’s gross domestic product grew at the fastest pace in seven months in November on gains in manufacturing, mining and energy. Output grew 0.3 percent to an annualized C$1.56 trillion ($1.56 trillion), following a prior gain of 0.1 percent, Statistics Canada said today in Ottawa. The median forecast in a Bloomberg economist survey was for a 0.2 percent expansion in the month.

Potash fell 1.9 percent to C$42.37. First-quarter earnings will be 50 cents to 65 cents a share, the Saskatoon, Saskatchewan-based company said today in a statement. The average of 17 estimates compiled by Bloomberg was for 69 cents. The company said taxes will be higher in 2013 because of reduced capital spending. Fourth-quarter earnings and revenue also trailed analyst projections.

Gildan Activewear Inc., the top-performing company in the S&P/TSX last year, fell 3.1 percent to C$36.71. Tal Woolley, an analyst with RBC Capital Markets, lowered his recommendation for the clothing supplier to sector perform, or hold, from outperform.

Gold Slips

“Strong price appreciation is the primary reason for our downgrade,” Woolley said in a note to clients today. Gildan now trades more expensively than its peers based on his 2014 earnings forecast of $3 a share, he said.

Barrick Gold fell 2.2 percent to C$31.76 and Goldcorp dropped 2.5 percent to C$35.13. After the close of trading, Barrick Gold confirmed in an e-mail that it was considering the sale of its Barrick Energy unit and other non-core assets.

Gold futures for April delivery dropped 1.2 percent to settle at $1,662 an ounce on the Comex in New York. Raw-materials producers in the S&P/TSX slipped 1.5 percent to the lowest closing level in five months.

BlackBerry lost 6.8 percent to C$12.92, extending its decline for the week to 27 percent. BlackBerry stumbled in its introduction of the BlackBerry 10 lineup yesterday, disappointing shareholders with the lack of a firm U.S. release date and setting a price that may be too high to lure away customers from Apple Inc. and Google Inc.’s Android.

Kulbinder Garcha, of Credit Suisse, is the latest analyst to downgrade the smartphone maker. In all, five analysts recommend buying the stock, 20 have a hold rating, and 20 advise selling, according to data compiled by Bloomberg.

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