Canada Stocks Fall on Economy Reports, Oil; Gold Miners Gain

By John Kipphoff

Dec. 15 (Bloomberg) -- Canadian stocks fell, led by financial companies and energy producers, after a U.S. manufacturing report fanned speculation that a deepening North American recession will cut profits.

Manulife Financial Corp. led insurers and banks lower, after manufacturing in New York contracted at the fastest pace on record. Husky Energy Inc. paced a drop in energy shares as crude oil prices dropped. Research In Motion Ltd. declined after rival Apple Inc. was downgraded at Goldman Sachs Group Inc.

“Confidence is still lacking in the financial sector,” said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto, which manages about C$3.5 billion.

The Standard & Poor’s/TSX Composite Index fell 53.62, or 0.6 percent, to 8,461.83 in Toronto. Losses were limited as mining shares including Barrick Gold Corp. advanced as prices for the precious metal climbed to the highest in two months.

The main Canadian equity benchmark has fallen 39 percent in 2008, poised for its worst-ever annual drop, after slumping commodity prices and global credit losses of almost $1 trillion dragged down the energy, mining and finance shares that account for three-quarters of the index’s value.

Manufacturing in the U.S., Canada’s biggest export market, slumped further in November as exports tumbled and automakers slashed their assembly rate to the lowest level in more than 18 years, the Federal Reserve said today in Washington.

The New York Fed reported the weakest factory performance in its region this month since its survey began in 2001. Canada sends about three-quarters of its exports to the U.S. and it the biggest supplier of oil and gas to the neighboring country.

Target Lowered

Manulife Financial slipped 3.2 percent to C$20.31. Canada’s biggest insurance company has its share-price target lowered by at least two analysts today after it completed a C$2.275 billion share sale last week to shore up capital.

Toronto-Dominion Bank, Canada’s second-largest lender, declined 2.9 percent to C$40.45. Royal Bank of Canada, the country’s biggest bank, retreated 1.6 percent to C$34.25.

National Bank of Canada, the nation’s sixth-largest lender, fell 7.1 percent to C$28.32 amid concern that there will be further delays to a plan to restructure C$32 billion in frozen asset-backed commercial paper. National Bank held about C$2.2 billion of the insolvent debt as of Oct. 31.

Canaccord Capital Inc., a Vancouver-based brokerage that agreed to buy back about C$58 million of the insolvent paper from clients after a successful restructuring, jumped a record 17 percent to C$3.80.

“It seems that things keep getting worse in terms of credit markets and the overall macroeconomic picture,” said Ralph Lindenblatt, a portfolio manager with Bissett Investment Management in Calgary, which has the equivalent of about $9.7 billion under management.

“That just makes it that much more challenging to come up with resolution” for the frozen ABCP market, he said.

Oil Retreats

Crude oil fell 3.8 percent to $44.51 a barrel, retreating from an earlier gain to above $50 a barrel in New York, on speculation that OPEC production cuts may be insufficient to bolster prices as the global recession curbs fuel consumption.

Husky Energy, the oil and gas producer controlled by Hong Kong billionaire Li Ka-shing, slid 5.8 percent to C$29.99. TransCanada Corp., the owner of the nation’s largest pipeline system, fell 2.4 percent to C$32.10.

Research In Motion, maker of the BlackBerry e-mail phone, declined 6.1 percent to C$45.52. Apple, the maker of the iPhone and Macintosh computers, was cut to “neutral” from “buy” by Goldman, Sachs analyst David Bailey, on concern that consumer spending is slowing. RIM, whose earnings report is scheduled for Dec. 18, said earlier this month that subscriber gains fell short of its forecasts in the third quarter.

Gold mining companies gained as gold prices rose to the highest in two months as the slumping dollar boosted the appeal of the precious metal as an alternative investment.

Barrick Gold Corp., the world’s biggest gold producer, added 4.5 percent to C$40.64. Goldcorp Inc., the second-largest gold miner by market value, gained 4.6 percent to C$36.38. Agnico-Eagle Mines Ltd., owner of Canada’s biggest gold deposit, jumped 7.6 percent to C$52.20.

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