Canada Stocks Retreat on Economy Concern, Led by Manulife

By John Kipphoff

Oct. 24 (Bloomberg) -- Canadian stocks fell, touching a four-year low, as finance and energy shares slid on concern that a deepening global economic slowdown will hurt demand for the nation's commodities.

Manulife Financial Corp., Canada's biggest insurance company, paced a drop in financial companies on an analyst downgrade. Petro-Canada led oil and gas companies lower as crude prices fell to a 16-month low. The main index pared its drop late in the session as some energy producers rebounded and gold miners, including Barrick Gold Corp., rallied along with the metal's price as investors sought a safe haven.

The Standard & Poor's/TSX Composite Index dropped 0.4 percent to 9,294.09 in Toronto after earlier falling 7.5 percent, the most in eight years, to the lowest since September 2004. The S&P/TSX, which derives three-quarters of its value from finance, energy and materials shares, slid 2.8 percent this week and is poised for a 21 percent drop in October, the steepest since the crash of 1987.

``It's truly awful, whichever way you measure it,'' said David Baskin, president of Baskin Financial Services in Toronto, which manages about C$350 million. ``It'll stop at some point. Valuations are looking attractive. But who wants to be the guy to make the call? Not me. You step in and buy something and 10 minutes later it's down 5 percent.''

Manulife Financial slid 3.9 percent to C$25, taking its drop in October to 35 percent. Canada's largest insurance company was cut to ``market perform'' from ``outperform' by BMO Capital Markets analyst John Reucassel. Manulife said this month that credit losses may cut third-quarter earnings by about C$250 million.

Lenders

Royal Bank of Canada, the country's biggest lender, declined 2.1 percent to C$46.50. Toronto-Dominion Bank, Canada's second-largest bank, retreated 2.1 percent to C$56.80.

A measure of financial companies slipped 2.5 percent.

Energy stocks fell 0.2 percent today, led by oil-sands companies. The group has dropped 25 percent in October.

Petro-Canada fell 3.3 percent to C$26.89. The nation's third-largest energy producer reported a 61 percent increase in profit this week and said it may pare back the C$23.8 billion ($22.3 billion), Fort Hills oil-sands project that it plans to build with partners UTS Energy Corp. and Teck Cominco Ltd.

UTS fell 11 percent to 92 cents and has lost 83 percent of its market value this year amid doubts that it can raise its share of the financing for Fort Hills. Teck Cominco, Canada's biggest diversified mining company, rose 3.7 percent to C$13 after dropping 33 percent in the previous three sessions.

Junior Partner

Opti Canada Inc. a junior partner in another oil sands project, Long Lake, dropped 13 percent to C$4.17. Opti and partner Nexen Inc. this week delayed a decision to expand the mine.

Suncor Energy Inc. was unchanged at C$26.20 after dropping as much as 12 percent. The world's second-biggest oil-sands mining company cut its 2009 capital budget by 33 percent yesterday to conserve cash, slowing construction at its Voyageur expansion project.

Gold climbed 2.2 percent to $730.30 an ounce in New York, paring its weekly drop as equities tumbled worldwide. Gold's gain helped materials shares in the S&P/TSX rise 4.9 percent, one of two industry groups among 10 in the index to advance today. It's still down 36 percent in October.

Barrick Gold Corp., the biggest bullion miner, rose 8.9 percent to C$25.75. Goldcorp Inc. gained 12 percent to C$22.

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