Canadian Stocks Decline, Led by Potash, Agrium, Barrick Gold

By John Kipphoff

Oct. 2 (Bloomberg) -- Canadian stocks dropped a second day, led by Potash Corp. of Saskatchewan Inc. and other raw-materials producers, on concern demand will weaken for fertilizers and declines in grain and metals prices.

Potash Corp. had its biggest intraday decline in 19 years after rival Mosaic Co. reported profit that fell short of analyst estimates and cut its forecast for phosphate sales. Merrill Lynch & Co. lowered its ratings on Potash and two other fertilizer stocks on concern that slumping prices and lower demand may hurt profit.

Barrick Gold Corp. dropped as bullion prices slid on speculation the U.S. will approve a plan to revive credit markets, reducing the appeal of the precious metal as a haven.

The Standard & Poor's/TSX Composite Index fell 2.6 percent to 11,414.49 at 9:55 a.m. in Toronto. Canada's main equity benchmark slipped 0.3 percent yesterday and fell 15 percent in September as declining commodity prices dragged down raw- materials and energy producers.

Potash, the largest maker of crop nutrients, fell 20 percent to C$108.88 for its steepest intraday loss since November 1989.

Agrium Inc., the third-biggest in North America, declined 15 percent to C$49.51. Mosaic, Potash and Agrium were cut to ``underperform'' from ``buy'' by Merrill Lynch analysts led by Don Carson in New York.

``With phosphate prices falling, nitrogen prices peaking and potash prices rising less than expected, there is considerable uncertainty surrounding the near-term earnings outlook,'' the Merrill analysts wrote in a note to clients today.

Gold futures for December delivery fell $28.30, or 3.2 percent, to $859 an ounce in New York.

Barrick Gold, the biggest bullion producer, dropped 3.5 percent to C$38.37. Goldcorp Inc, the second-biggest by market value, fell 2.5 percent to C$33.48.

Fairfax Financial Holdings Inc., the owner of U.S. and Canadian insurance companies that said last month it made a profit of $521.5 million on bets against U.S. financial companies, gained 2.1 percent to C$355.21 today.

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