By John Kipphoff
Nov. 12 (Bloomberg) -- Canadian stocks had their biggest drop this month as materials and energy producers slid with commodity prices and financial stocks tumbled after the government signaled that the credit crisis isn't abating.
Suncor Energy Inc. paced a retreat among resource producers as oil slid to a 21-month low. Teck Cominco Ltd. had a second- straight record drop on concern that it may be unable to pay off debt. Manulife Financial Corp. led finance stocks lower after Finance Minister Jim Flaherty offered more support to banks, predicting an ``extended period of stress'' in credit markets.
``We're in a bear-market -- anyone with problems gets spanked,'' said John Kinsey, who helps manage about C$1 billion for Caldwell Securities Ltd. in Toronto. ``Energy and commodities are down, and to complete things, financials are joining in. People don't want to own anything today.''
The Standard & Poor's/TSX Composite Index dropped 5.3 percent to 8,922.57 in Toronto. Canada's main equity measure has lost more than two-fifths of its value since climbing to a peak on June 18 as oil and commodities approached records.
Also weighing on the Canadian market today was a drop in U.S. stocks, triggered by the U.S. Treasury's plan to redirect the remainder of a $700 billion fund, originally earmarked for a bank bailout, to bolster consumer credit. A recession in Canada is ``inevitable'' as the U.S. economic slump spreads north, Toronto-Dominion Bank Chief Executive Officer Edmund Clark said.
Commodities account for a third of Canada's exports. Gauges of mining, energy and finance shares fell 9.9 percent, 6.8 percent and 4.3 percent, respectively, today. The S&P/TSX gets almost three-quarters of its value from those three groups.
Teck Cominco fell 24 percent to C$6.63. Canada's biggest diversified mining company dropped by a record for a second day on concern that prices for metallurgical coal may decline, and that it won't be able to repay $9.8 billion in debt used to finance last month's acquisition of Fording Canadian Coal Trust.
Asset Sales
The company denied yesterday that it plans a share sale after its stock fell 20 percent. Today Teck said that it may sell gold mines, interests in other projects and bonds.
``They don't need distressed asset sales,'' said Kinsey, whose firm holds Teck Cominco shares. ``They have strong cash flows. They'll get through this. At some stage it's a buy, but we don't like to catch a falling knife.''
Kinross Gold Corp., Canada's third-biggest bullion mining company, fell 13 percent to C$14.18. Barrick Gold Corp., the world's largest gold miner, retreated 9.8 percent to C$25.69.
Potash Corp. of Saskatchewan Inc., the biggest maker of crop nutrients by market value, fell 11 percent to C$85.57.
Oil fell 5.3 percent to $56.16 a barrel in New York, the lowest since January 2007, on speculation the International Energy Agency will cut its global demand estimate tomorrow and the U.S. will report that stockpiles increased. Gold fell as oil's drop reduced its appeal as an alternative investment.
Energy Companies
Suncor Energy, the second-largest oil-sands mining company, declined 12 percent to C$23.38, the most in almost a month. Canadian Oil Sands Trust, lead partner in the biggest tarsands producer, slid 14 percent to C$24.26. EnCana Corp., Canada's biggest energy company, dropped 6.2 percent to C$53.44. Canadian Natural Resources Ltd. fell 10 percent to C$47.95.
Minister Flaherty tripled the amount of mortgages the government is authorized to buy to as much as C$75 billion ($62 billion) to encourage new lending. Canada is also cutting the cost for banks to tap a government loan insurance program after it went unused at the initial premium.
The Bank of Canada said today that it will inject another C$8 billion into the banking system to temporarily buy up ``non- mortgage loan portfolio'' assets. State-owned Canada Mortgage and Housing Corp. bought C$7 billion of mortgages.
Manulife, North America's largest insurance company by market value, retreated 9.3 percent to C$23.35. Royal Bank of Canada, the country's biggest lender by assets, fell 5.5 percent to C$43.91. Toronto-Dominion, the second-largest bank, dropped 5.2 percent to C$52.95.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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