Canada Stocks Fall to 4-Year Low on Scotia Charge; EnCana Drops

By John Kipphoff

Nov. 19 (Bloomberg) -- Canadian stocks fell, sending the main index to a four-year low, as finance shares tumbled after a C$890 million writedown by Bank of Nova Scotia, the country's third-biggest lender.

``Scotia woke people up to the fact that they won't be the only ones with these problems,'' said Michael Sprung, president of Sprung & Co. Investment Counsel, which manages $50 million in Toronto. ``We see another quarter of similar writedowns across banks. Insurers are playing catch-up.''

Manulife Financial Corp. and Bank of Montreal paced the decline of a group of banks and insurers to the lowest since 2003, as the industry was also hit by Citigroup Inc.'s announcement that it will buy billions of dollars in assets from structured investment vehicles it advised. EnCana Corp. led energy shares lower as the price of oil extended a 22-month low.

The Standard & Poor's/TSX Composite Index fell 3.9 percent to 8,490.56 in Toronto, the lowest since September 2004. The S&P/TSX, which gets almost three-quarters of its value from finance and resource stocks, has dropped 44 percent below its June record as global credit losses approached $1 trillion and commodities slid.

Scotiabank fell 5.2 percent to C$35.24, the lowest price since June 2004. Canada's third-largest bank by assets said it will record pretax charges of C$890 million in its fourth quarter tied to trading and investments, and Lehman Brothers Holdings Inc. September bankruptcy. Profit will be cut C$595 million ($479.6 million) by the losses, Scotiabank said.

Falling Value

Citigroup agreed to acquire $17.4 billion of assets held from SIVs it advised, after the value of their investments declined from $21.5 billion as of Sept. 30.

Bank of Montreal fell 6.2 percent to C$38, the most since Sept. 29. The nation's fourth-biggest lender has agreed to lend two SIVs as much as $9.65 billion. Bank of Montreal is scheduled to kick off Canadian banks' fourth-quarter reports on Nov. 25.

``Similar losses relating to Lehman, credit spread-related valuation adjustments, and conduit asset repurchases cannot be ruled out when peer domestic banks report their results,'' Blackmont Capital analyst Brad Smith said in a note to clients.

Royal Bank of Canada, the country's largest bank, fell 5.4 percent to C$41.19. Toronto-Dominion Bank dropped 4.3 percent to C$49.33 and Canadian Imperial Bank of Commerce declined 5.1 percent to C$48.29., the lowest since May 2003.

Canadian banks may record a ``few hundred million'' dollars in writedowns each in the fourth quarter, TD Newcrest analyst Jason Bilodeau said. CIBC may have up to C$2 billion in charges, Bilodeau said, on investments tied to the U.S. housing market.

Manulife

Manulife Financial, Canada's biggest insurance company, slid 6.2 percent to C$20.97. Smaller rival Sun Life Financial Inc. dropped 5.8 percent to C$22.36, the lowest since June 2000.

A measure of financial shares, the biggest by value among the S&P/TSX's 10 industries, fell 4.9 percent to 1,195.09, the lowest price since Dec. 24, 2003. Energy shares, the next- largest group by weighting, fell 3.6 percent. Raw-materials producers lost 4.3 percent.

EnCana, Canada's largest energy company by market value, dropped 2.6 percent to C$51.21. Suncor Energy Inc., the second- largest oil-sands mining company, slid 4.5 percent to C$22.20, near a 3 ½ year low. Enbridge Inc., the nation's largest pipeline company, fell 4.8 percent to C$35.70.

Crude oil for December delivery fell 1.4 percent to $53.62 a barrel in New York after U.S. inventories climbed more than forecast on declining fuel demand. Futures have dropped 64 percent from a July 11 record of $147.27.

Copper prices fell the most in a week on signs that output is exceeding demand as a global economic slump trims consumption of the metal used in construction. Corn dropped a second day.

Potash Corp. of Saskatchewan Inc., the largest maker of crop nutrients by market value, slipped 5.9 percent to C$81.02, two-thirds below its June 17 record.

Teck Cominco Ltd. slid 15 percent to C$5.22, the lowest since May 2003. Canada's biggest diversified miner had its per- share earnings estimate cut 34 percent at JPMorgan Chase & Co.

Energy and mining ``stocks are reacting to lower commodity prices due to increasing recessionary fears,'' Sprung said.

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