Canada Stocks Fall as Oil Shares Slide Amid U.S. Shutdown

Canadian stocks fell, after rising the most in almost two weeks yesterday, as wireless carriers and oil producers retreated while investors watched for progress in efforts to end a U.S. budget impasse.

Canadian Natural Resources Ltd. lost 1.7 percent as U.S. crude production rose. BCE Inc., Rogers Communications Inc. and Telus Corp. dropped more than 0.8 percent to pace declines among phone stocks. Semafo Inc. jumped 6.7 percent as gold rebounded. Paladin Energy Ltd. added 6.4 percent after reporting cost-cutting plans. Air Canada gained 4 percent after winning a pair of slots for flights to a Tokyo airport. BlackBerry Ltd. reversed losses after a report that the company has drawn the interest of Cerberus Capital Management LP.

The Standard & Poor’s/TSX Composite Index fell 8.44 points, or 0.1 percent, to 12,839 at 4 p.m. in Toronto. The index has gained 3.3 percent this year for the third-worst performance among developed markets, ahead of only Hong Kong and Singapore. Trading volume was in line with the 30-day average today.

“There was a lot of buying yesterday that was jumping the gun,” Bob Decker, a fund manager with Aurion Capital Management, said in a phone interview from Toronto. His firm manages about C$6 billion ($5.81 billion). “The obvious linkage is what’s happening in Washington isn’t friendly to the economic outlook.”

U.S. President Barack Obama summoned the top four leaders of Congress to the White House today for talks on re-opening the government and raising the debt ceiling.

The U.S. government began shuttering some operations yesterday because of a budget stalemate. Congress now faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted on Oct. 17.

Economic Growth

A partial shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists, with the costs accelerating if the closing persists.

A private U.S. payrolls report said employment rose a less-than-forecast 166,000 in September, following a revised 159,000 gain in August that was also smaller than estimated, ADP Research Institute said.

BlackBerry rose 1 percent to C$8.27 after an earlier loss of as much as 5.4 percent. The Wall Street Journal reported that the company has drawn the interest of Cerberus, a private-equity firm that specializes in distressed assets. Fairfax Financial Holdings Ltd., the largest shareholder of BlackBerry, announced Sept. 23 it was leading a group of investors planning a buyout of the money-losing smartphone maker.

Restructuring Costs

BlackBerry tumbled earlier today after saying it will record costs of about $400 million, four times the amount it originally projected, as it reduces staff by 40 percent and sells off equipment and real estate.

Barrick Gold Corp. climbed 2.3 percent to C$19.02 and Semafo increased 6.7 percent to C$2.40 as gold rebounded from an eight-week low. Gold futures for December delivery rose 2.7 percent to $1,320.70 an ounce in New York, the most in almost two weeks.

Canadian Natural Resources declined 1.7 percent to C$32.25 and Cenovus Energy Inc. slipped 1.6 percent to C$30.31 as energy stocks dropped 0.5 percent as a group.

U.S. crude production climbed last week, the Energy Information Administration said. Output rose to 7.8 million barrels a day in the week ended Sept. 13, the highest level since May 1989.

Wireless Shares

BCE lost 0.8 percent to C$43.92, Rogers Communications fell 1 percent to C$43.91 and Telus retreated 0.9 percent to C$33.90 as telephone stocks dropped the most in the S&P/TSX.

Paladin Energy jumped 6.4 percent to 50 Canadian cents. The company said yesterday it will cut cash costs for 2014 by $23 million, including a 10 percent reduction in board and management base salaries. The company is also pursuing joint venture partners for its undeveloped assets.

Air Canada soared 4 percent to C$3.90, the highest close since November 2008. The company, Canada’s largest airline, will get one slot pair for flights to and from Tokyo’s Haneda airport, Japan’s transport ministry said in an e-mailed statement.

Before it's here, it's on the Bloomberg Terminal.