Canadian Stocks Fall on Oil; Canadian Natural, Barrick Decline

By John Kipphoff

Dec. 18 (Bloomberg) -- Canadian stocks fell the most in more than two weeks, led by energy companies and raw-materials producers, after crude oil fell below $36 a barrel for the first time since 2004 and gold prices retreated from a two-month high.

Canadian Natural Resources Ltd. and Barrick Gold Corp. each dropped more than 5 percent, pacing declines among the energy and mining shares that account for more than two-fifths of the main index’s value. National Bank of Canada retreated to the lowest in seven years after Deutsche Bank AG and other foreign lenders threatened to scuttle a plan to reschedule payments on C$32 billion ($27 billion) of Canadian commercial paper.

The Standard & Poor’s/TSX Composite Index fell 3.4 percent, to 8,425.35 in Toronto, the steepest drop since Dec. 1. The S&P/TSX has fallen 39 percent this year, poised for its worst annual drop, as commodity prices slumped from records and worldwide credit losses approached $1 trillion.

“The big story today is oil and resources,” said Paul Hand, managing director of equity trading at RBC Capital Markets in Toronto. “Materials and oil are weak, that’s why the S&P/TSX is down.”

Crude-oil futures dropped 9.6 percent to $36.22 a barrel in New York and touched $35.98, the lowest since June 29, 2004, on speculation that the drop in demand will outpace OPEC supply cuts as the economy weakens. Gold fell 0.9 percent from the highest price since Oct. 10 to $860.60 an ounce as the U.S. dollar rebounded, eroding the metal’s investment appeal.

Energy Companies

Canadian Natural, the nation’s fourth-biggest energy company by market value, fell 5 percent to C$45.10. Suncor Energy Inc., the world’s second-biggest oil-sands producer, dropped 7.2 percent to C$24.80. EnCana Corp., Canada’s largest, declined 2.1 percent to C$54.50.

Husky Energy Inc. dropped the most since Nov. 20, sliding 7.5 percent to C$29.01. The Canadian oil company controlled by Hong Kong billionaire Li Ka-shing said on Dec. 16 that it expects to cut capital spending to C$2.6 billion next year because of the global financial crisis. Husky forecast about C$3.6 billion in spending for 2008.

Goldcorp, the second-largest bullion mining company by market value, dropped 5.5 percent to C$34.49. Barrick Gold Corp., the biggest producer of the metal, slid 5.3 percent to C$40.50. Kinross Gold Corp. slid 12 percent to C$19.68.

A gauge of energy shares in the S&P/TSX declined 6.1 percent and a measure of raw-materials stocks fell 5.7 percent. Financial companies slid 1.7 percent as a group.

National Bank

National Bank fell 8.2 percent to C$25.62, the lowest price since Nov. 8, 2001. Banks backstopping the restructuring of the 30- to 90-day asset-backed debt held by Canadian banks said they’ll walk away from the deal tomorrow unless it’s completed. The paper hasn’t traded since August 2007, when investors began to shun the debt on concerns related to high- risk mortgage loans in the U.S. National Bank held about C$2.2 billion of the debt as of Oct. 31.

BCE Inc. rose 4.8 percent to C$23 after suing the Ontario Teachers’ Pension Plan and private-equity firms for compensation over their abandoned C$52 billion ($43.3 billion) takeover.

Trading was back to normal after a computer glitch shut the Toronto Stock Exchange and the TSX Venture Exchange most of yesterday.

TMX Group Inc. fell 1.6 percent to C$24.21, the lowest in two weeks. The operator of Canada’s two main equity bourses and the Montreal Exchange derivatives market apologized for the interruption. It was caused by a “network firmware issue” that made trading data unavailable to some members of the trading community, TMX Group said.

More than 773.8 million shares changed hands in Toronto as of 4:15 p.m., 23 percent more than at the same time last week.

“Everything is operating normally,” Hand said. “Whatever they did yesterday, whether they poured a cup of coffee in the trading engine or the vendor system -- they didn’t ever explain, whether they made an update and the patch didn’t work. Anyway, it’s all normal again so far.”

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