Potash, Canadian Natural May Drop; Toronto-Dominion May Rise

By John Kipphoff

Sept. 9 (Bloomberg) -- Potash Corp. of Saskatchewan Inc. and Canadian Natural Resources Ltd. may decline, based on bids on the Toronto Stock Exchange, after crude oil fell to a five- month low, leading commodity prices lower.

Toronto-Dominion Bank may rise for a second day after the U.S. government took over mortgage financial companies Fannie Mae and Freddie Mac, in an attempt to bolster credit markets. Le Fashion retailer Chateau Inc. may gain, on reporting profit that beat analysts' estimates.

The Standard & Poor's/TSX Composite Index fell 1.4 percent to 12,634.64 yesterday in Toronto. Canada's main equity benchmark, which derives more than three-quarters of its value from energy, materials and financial stocks, has dropped 16 percent from its June 18 record as commodity prices slumped and financial companies worldwide credit losses topped $500 billion.

Potash Corp., the world's largest maker of the fertilizer, may drop C$2 to C$160, bids already submitted in Toronto. Goldcorp Inc., the second-largest bullion producer by market value, may fall 30 cents to C$29, based on bids.

Canadian Natural, the nation's fourth-largest energy company by market value, may slip 50 cents to C$79.50, according to bids.

Crude oil fell as much as 2 percent to $104.23 a barrel in electronic trading in New York, and natural gas also declined, after Saudi Arabia's oil minister said supplies are sufficient to meet demand. Gold, copper, soybeans and wheat prices also slid.

Toronto-Dominion may gain 68 cents to C$63.05, according to bids. Canada's second-biggest rose yesterday along with financial shares worldwide, from optimism that lenders may be able to stem $507 billion of losses tied to bad mortgages.

The U.S. seized control of Fannie Mae and Freddie Mac yesterday, putting the two mortgage companies in a government- operated conservatorship. Treasury Secretary Henry Paulson stepped in to prevent a collapse of the government-chartered companies and the $12 trillion residential mortgage market.

Toronto-Dominion Bank said in April that it had C$7.8 billion of mortgage-backed securities tied to Fannie and Freddie, RBC Capital Markets analyst Andre-Philippe Hardy said in a note yesterday.

Le Chateau may gain 65 cents to C$14.15, based on bids. The clothing retailer reported second-quarter earnings of 39 Canadian cents a share before one-time items, exceeding the average of analysts' estimates in a Bloomberg survey by 14 percent. The company also raised the quarterly dividend by 17 percent to 17.5 cents a share.

U.S. stock-index futures advanced, pointing to a third straight day of gains, as a drop in oil eased concern that higher fuel costs will erode earnings at travel companies.

To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.