Canada Stocks Fall as Slide in Gold, Oil Overshadows Insurers

Canadian stocks fell, leaving the benchmark index at a two-week low, as commodity stocks slumped on falling oil and gold prices after the European Central Bank unexpectedly cut its benchmark interest rate.

Dundee Precious Metals Inc. lost 5.8 percent as gold slid to a three-week low. Penn West Petroleum Ltd. tumbled 8.5 percent for a second day of losses after saying yesterday its turnaround will extend into 2014. Manulife Financial Corp. rose 2.7 percent as profit advanced on rising wealth and insurance product sales. Sun Life Financial Inc. gained 2.4 percent as the insurer’s profit topped estimates.

The Standard & Poor’s/TSX Composite Index lost 86.21 points, or 0.6 percent, to 13,294.20 at 4 p.m. in Toronto, the lowest since Oct. 23. The benchmark Canadian equity gauge has advanced 6.9 percent this year, the third-worst performer in the world among developed markets, ahead of Hong Kong and Singapore.

“Oil has continued to sell off and Draghi cutting interest rates to stimulate the economy has caught the markets by surprise,” said Philip Petursson, director of institutional equities with Manulife Asset Management Ltd., in a phone interview from Toronto. His firm manages about C$248 billion ($237 billion). “The decline in gold has to do with the ECB, we’ll see a downward trend for gold as the U.S. dollar rises against the euro.”

Commodity prices dropped as the dollar spiked against the euro after European Central Bank President Mario Draghi cut the region’s benchmark interest rate to a record low. The greenback’s gain put pressure on dollar-denominated products such as oil.

Better-than-expected U.S. growth in the third-quarter fueled speculation the Federal Reserve would cut monetary stimulus sooner than anticipated, damping demand for gold.

Materials Stocks

Nine of 10 industries in the S&P/TSX retreated. Trading volume was 7.7 percent higher than the 30-day average at this time of day.

Materials producers dropped 1.9 percent. Dundee Precious Metals slumped 5.8 percent to C$4.10 and Torex Gold Resources Inc. sank 11 percent to 92 Canadian cents, the lowest in four years, as the price of gold dropped to a three-week low.

Energy stocks lost 1.1 percent as a group. Bellatrix Exploration Ltd. dropped 7.1 percent to C$7.32 and Suncor Energy Inc. retreated 1.6 percent to C$36.09 as crude declined.

Penn West Petroleum tumbled 8.5 percent to C$8.91, extending a two-day loss to 23 percent. The Calgary-based company yesterday slumped the most since 2008 after saying it will target as much as C$2 billion in asset sales. Penn West has cut more than 25 percent of its workforce this year.

Insurer Results

Manulife Financial, Canada’s largest life insurer by market value, rose 2.7 percent to C$19.22, for the highest close in three years. The company posted third-quarter adjusted profit of 36 cents a share, topping the 35-cent average estimate of 12 analysts surveyed by Bloomberg.

Sun Life Financial gained 2.4 percent to C$36.27, the highest level for the stock since August 2009. The insurer yesterday reported said profit beat estimates as revenue from wealth-management and insurance sales increased. Company executives said on a conference call today that expenses will be lower next year.

TMX Group Ltd., the operator of the Toronto Stock Exchange, rallied 2.3 percent to C$48.12, the biggest gain since August.

The Toronto-based company reported adjusted third-quarter earnings of 75 Canadian cents a share, ahead of the 74-cent average estimate of analysts surveyed by Bloomberg.

TMX’s operating expenses fell 7 percent compared with the second quarter, and the company is now on track to achieve C$28 million in annualized savings, ahead of previous projections for C$20 million, the company said.

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