Canadian Stocks Fall, Led by EnCana, on U.S. Retail Sales Drop

By Whitney Kisling

Nov. 14 (Bloomberg) -- Canadian stocks had their worst weekly slide in a month after energy and financial companies fell today on a record drop in U.S. retail sales that fueled concern the recession will cut demand for Canada's exports.

EnCana Corp., Canada's biggest energy company by market value, and Royal Bank of Canada, the biggest lender, declined after the retail report. BlackBerry e-mail phone maker Research in Motion Ltd. led the week's declines on analyst estimate cuts and a worsening outlook for mobile phones. Gold producers led weekly gains on the index.

The Standard & Poor's/TSX Composite Index fell 3.2 percent to 9,055.96 today in Toronto. Its 5.6 percent decline from last Friday was the worst weekly performance since Oct. 10. Retail sales in the U.S. dropped 2.8 percent in October, the most since records began in 1992, pushing the world's biggest economy toward its worst slump in decades. Spending may continue to falter from job losses, plunging stocks and falling home values, the Commerce Department said today.

``This retail sales number was horrific,'' said John Stephenson, who helps to oversee about $1.5 billion at First Asset Investment Management Inc. in Toronto. ``The U.S. consumer is clearly starting to roll over, and that can't be good for gassing up and going to the mall. How can the U.S. have a cold and we not catch the flu?''

The Standard & Poor's 500 Index fell 4.2 percent to 873.29, extending a second straight weekly loss, and has lost 41 percent this year. In Canada, the S&P/TSX benchmark index, which derives three-fourths of its value from energy, mining and finance shares, has fallen 35 percent this year and 40 percent from a June high.

Oil Declines

Crude oil for December delivery fell $1.94, or 3.3 percent, to $56.30 a barrel in New York today, ending the week down 7.8 percent. EnCana dropped 5.8 percent to C$54.75 today. Suncor Energy Inc. fell 3.5 percent to C$23.34. Canadian Natural Resources Ltd. declined 4.7 to C$48. The three are the biggest companies in an index of Canadian energy stocks, which lost 5.3 percent this week.

Royal Bank of Canada led a benchmark of financial stocks down 2.7 percent today. Canadian banks and insurance companies should be careful with excess capital, Julie Dickson, who heads the Office of the Superintendent of Financial Institutions, said in a speech yesterday.

Financial institutions worldwide have posted more than $950 billion in losses and credit writedowns this year as the worst financial slump since the Great Depression worsens. Shares of Royal Bank lost 3.8 percent to C$44.50. Bank of Nova Scotia, the third largest bank in Canada, fell 5.1 percent to C$37.45.

`Same Brush'

``The financials are actually being tarred with the recession brush as well,'' said John Kinsey, who helps manage about C$1 billion for Caldwell Securities Ltd. in Toronto. ``It looks like we're going to get maybe a world recession, and the next step is the big question, whether it'll turn into a depression.''

Manulife Financial Corp., North America's largest insurance company by market value, pared losses today, adding 1.9 percent to C$23.08, after plunging 14 percent the past three days. Toronto-Dominion Bank, the nation's second-largest lender by assets, led the weekly decline in financial companies, ending the five-day period down 6.4 percent to C$53.57.

Research in Motion, the maker of the BlackBerry smart phone, which relies on the U.S. for most of its sales, fell for a fifth straight day, losing 15 percent to C$49.15 this week. Nokia Oyj said the recession has damaged consumer spending and cut its estimate of 2008 industrywide global shipments to 1.24 billion phones from 1.26 billion. Nokia, the world's largest maker of mobile phones, also expects phone shipments to shrink next year.

Estimates Cut

Research in Motion, which has dropped 67 percent from a June 19 high, also had its profit estimates cut yesterday by UBS AG, Global handset shipments for 2009 will also be lower than previously expected, UBS said.

Gold rose the most in eight weeks today, after the U.S. retail report and on speculation the world's central banks will add more liquidity, causing inflation and increasing gold's appeal.

Agnico-Eagle Mines Ltd., owner of Canada's biggest gold deposit, rallied 4.9 percent this week to C$40.01. Goldcorp Inc., which lost 6.4 percent today, ended the week up 0.3 percent to C$26.21.

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net.