Canadian Stocks Fall Most Since 2000 as Potash, Barrick Slump

By John Kipphoff

Oct. 2 (Bloomberg) -- Canadian stocks tumbled the most in almost eight years, led by a record drop in raw-material shares, as tighter credit, rising unemployment and lower home prices threatened to tip the U.S. into a recession.

Potash Corp. of Saskatchewan Inc. fell the most since 1989 after rival Mosaic Co. posted profit that missed analysts' estimates and cut its sales forecast. Barrick Gold Corp. plunged the most in two decades as bullion declined on speculation the U.S. will approve a $700 billion plan to revive credit markets, reducing the metal's appeal.

Suncor Energy Inc. touched the lowest in 15 years, leading oil and gas producers lower as crude fell below $95 a barrel and Merrill Lynch & Co. said it may drop to $50. The Standard & Poor's/TSX Composite Index fell 7 percent to 10,900.54 in Toronto, the most since Oct. 25, 2000.

``Commodities are getting pummeled,'' said Martin Anstee, a fund manager at Stone Asset Management in Toronto, which oversees about $800 million. ``People are forecasting a wall of recession, which means lower commodity prices. We had a good run on higher commodities -- now we're taking it in the neck.''

Canada's main stock benchmark has slid 28 percent from its June 18 record to the lowest since November 2005, entering a bear market last month as slumping commodities dragged down the materials and energy shares that account for more than two- fifths of its value. The S&P/TSX is still trading 91 percent higher than in October 2002, when the last bull market began.

Potash, the largest crop nutrient maker, fell 26 percent to C$101.21 for its worst loss since trading began in November 1989.

Fertilizer Rout

Agrium Inc., North America's third-biggest fertilizer company, slid 23 percent to C$45.01 for its steepest drop since March 1989. Merrill Lynch & Co. analysts cut their Mosaic, Potash and Agrium recommendations to ``underperform'' from ``buy'' on concern that slumping prices and lower demand may hurt profit.

Energy, metals and agricultural commodities comprise more than half Canada's exports. The U.S. buys about three quarters of the total. A gauge of materials stocks slid 17 percent for its steepest intraday drop since the index's start in 1995.

The London interbank offered rate that banks charge each other for loans rose for a fourth day, intensifying a global credit squeeze. First-time jobless benefits applications rose to a seven-year high in the U.S., and factory orders in August fell by the most in almost two years as business spending slowed.

Gold futures for December delivery fell 4.8 percent to $844.30 an ounce in New York. Copper and corn prices plunged.

Miners Slump

Barrick Gold, the biggest bullion producer, dropped 16 percent to C$33.25, the most in almost 21 years. Goldcorp Inc., the second-biggest by market value, fell 20 percent to C$27.51 for its worst drop since 1994. Yamana Gold Inc. slid 19 percent to C$7.20.

FNX Mining Co., a producer of nickel and copper ore, retreated 20 percent to C$8.70, the most since December 2000.

An index of energy stocks slid 7.6 percent and touched the lowest in almost three years. Oil dropped 4.6 percent to $93.97 a barrel in New York after the U.S. dollar reached a one-year high against the euro and U.S. fuel demand dropped to the lowest since the last recession. Oil, up 17 percent from a year ago, has fallen 36 percent from a record $147.27 on July 11.

Suncor fell 12 percent to C$36 and earlier dropped 13 percent for its biggest intra-day drop since trading began in February 1991. The second-largest oil-sands mining company fell even after it was added to Goldman, Sachs & Co.'s ``Conviction Buy'' list, as analysts said the shares are ``oversold.''

EnCana Corp., Canada's biggest energy company by market value, fell 9.2 percent to C$59.46. Canadian Natural Resources Ltd. decreased 8.9 percent to C$65.11.

`Unlikely' Scenario

Crude-oil may fall as low as $50 next year, about half the current level, in the ``unlikely'' event of a global recession, weighing on shares of petroleum producers, Merrill Lynch analysts Mark Hume and Alexis Clark wrote in a report.

``People are going from bulls to bears -- that's got people scared,'' Anstee said. ``We'll have a slowdown yes, but not a deep recession. I bought some Agrium this morning and I'm sorely tempted on Potash. People think that maybe Suncor and the other oil-sands guys won't be able to finance their expansions. I think Suncor below C$40 is getting attractive.''

Financial companies, the biggest industry in the S&P/TSX with a 33 percent weighting, fell 3.4 percent today.

Royal Bank of Canada, the country's largest lender by assets, slid 3.8 percent to C$48.95. Manulife Financial Corp., Canada's biggest insurance company, dropped 4.6 percent to C$37.21. GMP Capital Trust, an independent securities firm, retreated 13 percent to C$8.86, the lowest in four years.

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