Canada Stocks Erase Gains on Syria Concerns as Materials Rally

Canadian stocks erased gains, sending the benchmark index lower after a two-day advance, as concern over Syria overshadowed a rally in commodity shares and speculation the U.S. Federal Reserve won’t reduce stimulus soon.

Paramount Resources Ltd. lost 2.8 percent as energy shares slid. Alacer Gold Corp. and Endeavour Silver Corp. climbed more than 4.1 percent to pace gains among commodity producers. Agrium Inc. and Potash Corp. of Saskatchewan Inc. jumped at least 2.4 percent as OAO Uralkali’s chief executive officer was detained in Belarus after the largest potash producer pulled out of a joint venture that controlled more than 40 percent of exports.

The Standard & Poor’s/TSX Composite Index fell 2 points, or less than 0.1 percent, to 12,760.30 at 4:00 p.m. in Toronto, erasing an earlier advance of 0.4 percent. The index has gained 2.2 percent in August. Trading volume was 20 percent lower than the 30-day average at this time of the day.

“Lots of people are in wait-and-see mode,” Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. His firm manages C$220 million ($214 million). “They are going to be monitoring the data out of the U.S. very closely to see what the Fed is going to be doing. The materials index is up nicely.”

‘Inexcusable’ Actions

Stocks fell after U.S. Secretary of State John Kerry said the president will hold Syria’s government accountable for using chemical weapons. President Barack Obama is consulting with allies and members of Congress and “believes there must be accountability for those who have used the world’s most dangerous weapons,” Kerry said.

“By any standard it is inexcusable,” Kerry told reporters in Washington today, saying evidence makes it “undeniable” that Syrian President Bashar al-Assad’s regime was responsible for last week’s attack that the opposition blames for more than 1,300 deaths.

The S&P/TSX had gained as much as 0.4 percent earlier, led by rising commodity shares, as a report showing a drop in U.S. durable-goods orders spurred speculation the Fed won’t reduce stimulus soon. U.S. Commerce Department data showed bookings for goods meant to last at least three years decreased 7.3 percent, the most since August 2012.

Federal Reserve officials are weighing when to begin curbing bond purchases that they pledged to maintain until the job market improves. Minutes released on Aug. 21 showed policy makers were comfortable with Chairman Ben S. Bernanke’s plan to taper this year if the economy strengthens.

Crude, Gold

Nine of 10 industries fell as a decline in energy shares offset a 1.7 percent rally in raw-materials producers.

Energy companies dropped 0.4 percent, erasing an earlier advance of as much as 0.3 percent. West Texas Intermediate crude fell for the first time in three days, declining 0.5 percent.

Paramount Resources slid 2.8 percent to C$33.20. AltaGas Ltd. fell 0.2 percent to C$35.52.

Alacer rose 7 percent to C$3.50, the highest level since April. Iamgold Corp. climbed 1.6 percent to C$7.17. Endeavour Silver gained 4.1 percent to C$5.83. Silver futures jumped 1.2 percent, while gold was down 0.2 percent at $1,393.10 an ounce.

Potash producers rallied after Uralkali CEO Vladislav Baumgertner was charged with abusing his office as chairman of Belarusian Potash Co., the trading venture that Russia’s Uralkali and Belaruskali set up in 2005.

Agrium rose 3.3 percent to C$94.07. Potash Corp. gained 2.4 percent to C$32.10.

The S&P/TSX Commercial Banks Index increased 0.2 percent to a record high. Five of eight companies in the group rose today. Canadian banks are scheduled to post earnings this week, with Bank of Montreal and Bank of Nova Scotia reporting tomorrow.

Canada Imperial Bank of Commerce climbed 1 percent to C$80.69. Bank of Montreal rose 0.9 percent to C$65.78. Toronto-Dominion rose 0.2 percent to a record C$88.96.

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