Canada Stocks Fall, Led By Oil Producers; EnCana, Suncor Drop

By John Kipphoff

Oct. 22 (Bloomberg) -- Canadian stocks fell, pushing the main index toward its worst monthly drop in 21 years, as energy shares including Canadian Natural Resources Ltd. slumped along with oil prices on signs that fuel consumption is dropping.

Barrick Gold Corp. dropped along with prices of bullion and copper as lower demand and a higher U.S. dollar dimmed the investment appeal of commodities. GMP Capital Trust led financial shares lower after cutting its cash dividend, saying that the global credit crisis curbed equity sales and mergers.

The Standard & Poor's/TSX Composite Index fell 5.7 percent to 9,236.88 in Toronto. Canada's broadest stock benchmark, which derives more than three-quarters of its value from commodity and financial shares, has lost 21 percent in October, the most since after the ``Black Monday'' crash in the same month in 1987.

``There is so much force pulling commodities down hard,'' said Michael Sprung, president of Sprung & Co. Investment Counsel, which manages $50 million in Toronto. ``For the S&P/TSX, 8,000 to 8,500 is not out of the question, as an extreme, 7,500. That would be a 50 percent decline from the peak, not unusual in a bear market.''

The S&P/TSX has dropped 39 percent from its June 18 record as debt markets froze after more than $660 billion in credit losses at global institutions. The ensuing financial crisis, the worst since the Great Depression, led to a collapse in commodity prices and the failure of financial institutions including U.S. investment bank Lehman Brothers Holdings Inc.

Canadian Natural Resources, whose horizon oil-sands mine is scheduled to start production this year, dropped 11 percent today to C$49.26.

Oil Sands Miner


Suncor Energy Inc., the oil-sands mining company, fell 8.2 percent to C$26.46. EnCana Corp., Canada's biggest energy company by value, slid 6.2 percent to C$50.74. Addax Petroleum Corp., which explores for oil in Africa and Iraq, plunged 16 percent to C$16. Opti Canada Inc., which this week put off a decision to expand its Long Lake oil-sands mine because it can't access cash, dropped a record 23 percent to C$5.12.

Crude-oil futures in New York slid 7.5 percent to $66.75 a barrel, the lowest since June 2007, after a U.S. Energy Department report showed that fuel demand during the past four weeks fell 8.5 percent from a year ago. Gold touched $720 an ounce for the first time in a year, and copper extended its decline to the lowest since November 2005. The Reuters/Jefferies CRB Index of 19 raw materials touched the lowest in four years.

Bullion Producer

Barrick Gold, the largest bullion producer, slipped 13 percent to C$25, the lowest in four years. Goldcorp Inc. dropped 14 percent to C$20.84. Agnico-Eagle Mines Ltd., owner of Canada's biggest gold deposit, sank 25 percent to C$31.75, the most since at least 1983. Teck Cominco Ltd., Canada's biggest diversified miner, slid 17 percent to C$14.32 before its second- quarter earnings announcement after markets closed.

Ivanhoe Mines Ltd., which is developing a copper and gold mine in Mongolia with Rio Tinto Plc, plunged 28 percent to C$2.15, the lowest since July 2002.

GMP Capital declined 10 percent to C$5.41, a record. The Toronto-based investment bank cut its monthly payout by more than half to 5 cents yesterday.

``The severity of prevailing volatile market conditions is the worst seen in several decades in the Canadian capital markets,'' Chief Executive Officer Kevin Sullivan said.

The Canadian dollar fell the most since at least 1971 today and has declined 15 percent this month to a three-year low against its U.S. counterpart as investors worldwide sold resource-related assets to pay for losses elsewhere, fueling speculation the five-year commodity boom that lifted Canadian stocks to their peak earlier in 2008 has ended.

Rate Cut

The Bank of Canada lowered its interest rate for overnight loans between commercial banks by a quarter point to 2.25 yesterday and signaled more reductions as it slashed its 2009 forecast for economic growth in Canada by almost three-quarters to 0.6 percent. The central bank predicted exporters will be hurt by a U.S. recession, and a ``mild'' global contraction.

Bank of Nova Scotia, the country's third-largest lender, fell 6.6 percent to C$41.10.

Manulife Financial Corp. fell 5.7 percent to C$25.76. The nation's biggest insurance company slid for a second day after rival Sun Life Financial Inc. reported its first quarterly loss yesterday since demutualization in 2000, on writedowns tied to Lehman Brothers debt, and the falling value of its stock investments. Manulife, which reports results in November, said this month that credit losses will cut profit by C$250 million.

Measures of financial, energy and raw-materials shares fell 4.2 percent, 8 percent and 9.6 percent, respectively today. They are the worst performers this month among the S&P/TSX's 10 industries, down 16 percent, 27 percent and 36 percent.

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