Suncor Energy, Toronto-Dominion May Fall on Oil, Market Turmoil

By John Kipphoff

Sept. 16 (Bloomberg) -- Suncor Energy Inc. may decline, based on bids on the Toronto Stock Exchange, after crude oil tumbled a second day on concern that turmoil in financial markets may weaken the global economy and reduce demand.

Toronto-Dominion Bank may retreat, joining a global rout of financial companies, as American International Group Inc. tumbles in New York after its credit ratings were cut, threatening efforts to raise funds to keep the insurer afloat.

The cost of borrowing in dollars overnight more than doubled to the highest since 2001 as yesterday's collapse of Lehman Brothers Holdings Inc. and the credit downgrades of American International Group led banks to hoard cash.

The Standard & Poor's/TSX Composite Index declined 4 percent to 12,254.03 yesterday in Toronto, the most since Jan. 21. Canada's main equity benchmark, which derives more than three-quarters of its value from energy, materials and financial stocks, has lost about C$214 billion ($200 billion) in value in September. The S&P/TSX has fallen 19 percent from its June 18 record, approaching a so-called bear market.

Crude oil for October delivery fell as much as 5.1 percent, to $90.83 a barrel, the lowest intraday price since Feb. 8.

AIG shares tumbled 61 percent in early New York trading.

Suncor, the second-largest oil-sands producer, may fall C$1.25 to C$45, bids already submitted in Toronto showed. Canadian Natural Resources Ltd. may drop C$1.01 to C$76. Talisman Energy Inc. may retreat 36 cents to C$16.05, bids showed.

Toronto-Dominion, Canada's second-biggest bank, may decline C$1.23 to C$60.07, bids suggested. Royal Bank of Canada, the largest, may drop C$1 to C$47.10.

Manulife Financial Corp. may slip 90 cents to C$36.10, bids indicated. Canada's biggest insurer is a likely candidate to buy the AIG's variable annuity business if it is put up for sale, RBC Capital Markets analyst Andre-Philippe Hardy said in a note to clients yesterday.

Potash Corp. of Saskatchewan Inc., the biggest maker of crop nutrients by market value, may decline C$4.11 to C$159.72, according to bids. Potash inventories controlled by North America crop-nutrient producers fell 21 percent in August to their lowest in at least 19 years. A strike at three Canadian mines reduced output by 17 percent in August, according to figures published today by the Washington, D.C.-based Fertilizer Institute.

U.S. stock-index futures declined after the jump in overnight lending rates and the credit downgrades of American International showed strains on the financial system are intensifying.

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