Canada Stocks Fall as Investors Weigh Economy, Stimulus Efforts

Canadian stocks fell, sending the benchmark index to the lowest since April 23, as energy and phone companies slumped and investors weighed prospects for economic growth and the pace of U.S. stimulus efforts.

Dollarama Inc., the dollar-store retailer, fell 3.4 percent after earnings missed analyst estimates. Bonavista Energy Corp. dropped 5.5 percent to lead a decline in energy shares. BCE Inc. and Telus Corp. retreated at least 1.3 percent after Canada’s top broadcast regulator said he will look more closely at ownership transactions for competition concerns. Pretium Resources Inc. and Gabriel Resources Ltd. climbed at least 3 percent as gold producers rallied.

The Standard & Poor’s/TSX Composite Index fell 113.68 points, or 0.9 percent, to 12,109.89 at 4 p.m. in Toronto. The index has tumbled 2.6 percent this year, the third-worst performance among developed markets. Trading volume was 9.5 percent lower than the 30-day average at this time of the day.

“We’ve finished earnings season and now we’re just waiting for economic data,” said Jeffrey Bradacs, a fund manager with Manulife Asset Management Ltd. He helps oversee about C$1.50 billion ($1.47 billion) with his team. “The key for the market these days is to see how strong the economy is and to see whether the Fed tapers stimulus.”

U.S. Federal Reserve Chairman Ben S. Bernanke said May 22 that the Fed could scale back stimulus efforts if the employment outlook shows “sustainable improvement.”

Telecommunications stocks slumped 1.9 percent as a group as nine of 10 industries retreated in the S&P/TSX.

BCE, which is attempting to acquire Astral Media Inc. for C$3.7 billion after having an earlier agreement scuttled by regulators, dropped 1.3 percent to C$43.95, the lowest since January. Telus, which had its own deal for Mobilicity blocked by the government, retreated 1.7 percent to C$33.67.

Tougher Test

Jean-Pierre Blais, chairman of the Canadian Radio-television and Telecommunications Commission, said in a speech today in Banff, Alberta, that he will be applying a tougher public interest test on ownership transactions.

“That was clear from our response to the initial application made by BCE to acquire control of almost all of Astral’s holdings,” Blais said. “Our decision last fall sent a clear signal that the public interest is paramount.”

Dollarama, based in Montreal, sank 3.4 percent to C$70.13, the biggest decline since August 2011. The company reported adjusted first-quarter earnings of 62 Canadian cents a share, short of the median analysts’ estimate of 67 cents according to a Bloomberg survey.

The company had topped analysts’ estimates on a per-share basis for 14 straight quarters since Dollarama went public in October 2009.

Crude Producers

Bonavista Energy lost 5.5 percent to C$14.50 as the S&P/TSX Energy Index fell to the lowest level since April, with 48 of 58 members declining.

Penn West Petroleum Ltd. jumped 3.9 percent to C$11.33, the highest close since March 25. The stock has jumped 8.8 percent over three days, after the company last week named a new chief executive officer and board leadership and said it will explore options to increase returns.

Pretium Resources jumped 6.6 percent to C$8.45 and Gabriel Resources added 3 percent to C$1.38 as the price of gold rallied

1.1 percent to settle at $1,392 an ounce in New York. The U.S. dollar declined a third day, increasing demand for the precious metal as an alternative investment.