Canada Stocks Fall on Oil, Profit Concern; Suncor, Potash Drop

By John Kipphoff

Dec. 22 (Bloomberg) -- Canadian stocks fell, sending the main index to its biggest drop in three weeks, as energy producers slid along with oil prices.

Suncor Energy Inc. fell 11 percent as crude slid on speculation that the global recession will curtail oil demand faster than OPEC can cut output to bolster prices. Potash Corp. of Saskatchewan Inc. also sank 11 percent, after the fertilizer maker was downgraded by Goldman Sachs Group Inc. on a reduced profit forecast.

“I see more deterioration in energy stock prices,” said Bill Tynkaluk, who helps manage about $2 billion at Leon Frazer & Associates Inc. “The price of oil looks like it’s going down further.”

The Standard & Poor’s/TSX Composite Index dropped 305.05, or 3.5 percent, to 8,249.53, the lowest since Dec. 1. The main Canadian stock index has fallen 38 percent in 2008, poised for its worst year, as commodity prices slid from records and financial institutions worldwide posted credit losses and writedowns of more than $1 trillion, dragging done the commodity-related and financial stocks that account for three- quarters of its value.

Suncor Energy, the second-largest oilsands producer, dropped C$2.64 to C$22.35, the most since Dec. 1. EnCana Corp., Canada’s biggest energy company by market value, fell 5.4 percent to $51. Canadian Natural Resources Ltd., owner of the Horizon oilsands project, fell 4.6 percent to C$42.83. Petro- Canada, the country’s third-largest oil and gas producer, slid 5.2 percent to C$25.64.

Crude oil for February delivery fell 5.8 percent $39.91 a barrel in New York. Japan, the world’s third-biggest oil consumer, imported 17 percent less oil last month compared with a year earlier, according to a report from the finance industry.

Inventories Climb

Oil has dropped 73 percent from a record $147.27 in July as inventories rose in 11 of the past 12 weeks reported by the U.S., the biggest oil user.

Potash Corp., which reduced its full-year earnings forecast last week, fell 11 percent to C$79.33. The biggest maker of crop nutrients by market value was downgraded to “neutral” from “buy” by analysts led by Robert Koort at Goldman Sachs Group Inc. in Houston. The Goldman analysts reduced their earnings estimates for fertilizer makers and seed company Monsanto Co. on expectation of lower prices and a smaller corn crop in 2009.

Teck Cominco Ltd. dropped 11 percent to C$5.15. The owner of the Elk Valley Partnership, the second-largest exporter of seaborne coking coal, fell after rivals BHP Billiton Ltd. and Rio Tinto Group had their earnings forecasts cut at UBS AG, on reduced estimates for the fuel used in steelmaking.

Retreat

Research In Motion Ltd. retreated 6.2 percent to C$50.03. The maker of the BlackBerry e-mail phone had surged 14 percent on Dec. 19, a day after forecasting better-than expected sales for the current quarter.

National Bank of Canada, which held about C$2.2 billion of insolvent asset-backed commercial paper as of Oct. 31, gained 3.6 percent to C$29.90. The Globe and Mail said that the government and banks including Deutsche Bank AG and Merrill Lynch & Co. reached an agreement to restructure C$32 billion ($26 billion) of the securities.

The agreement reached during the weekend is likely to give investors access to their money by January unless there are any last-minute complications, the Globe reported today, citing people it didn’t identify.

Other lenders dropped. Toronto-Dominion Bank, the second- largest bank in Canada, fell 2.3 percent to C$41.20.

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