Canadian Stocks Fall, Led by TD Bank, After Wells Downgrade

By Mary Childs

Oct. 21 (Bloomberg) -- Canadian stocks fell the most in two weeks, led by financial shares, after an analyst’s downgrade of Wells Fargo & Co. in the U.S. raised concerns that the credit crisis may linger.

Toronto-Dominion Bank dropped 1.7 percent, while Royal Bank of Canada slipped 0.7 percent. Insurer Manulife Financial Corp. lost 2.5 percent, after it got a “sector perform” rating from National Bank of Canada. Barrick Gold Corp. led gains among raw material producers, as bullion rallied on a weaker U.S. dollar.

The Standard & Poor’s/TSX Composite Index lost 96.10 points, or 0.8 percent, to 11,442.02. The index erased earlier gains of as much as 0.5 percent after analyst Dick Bove of Rochdale Securities cut the largest U.S. home lender to “sell” and said its earnings were boosted by mortgage-servicing fees rather than improving business trends. Financial companies are the biggest industry group in the S&P/TSX.

“U.S. banks are down today because of Wells Fargo,” said John Kinsey, who helps manage about C$730 million as a money manager at Caldwell Securities Ltd. in Toronto. When U.S. “financials go down, we sometimes follow in sympathy.”

Toronto-Dominion, the nation’s second-largest bank, fell 1.7 percent to C$64.20. Royal Bank, the country’s biggest lender, slipped 0.7 percent to C$56.11.

Manulife Financial, Canada’s biggest insurance company, fell 2.5 percent to C$21.80.

“While risk should continue to gradually decline as the markets improve and the variable annuity exposure lessens, we do not see a recovery to previous profitability levels in the foreseeable future,” National Bank analysts wrote, initiating coverage of the stock.

Gold Rallies

Barrick, the world’s largest bullion producer, climbed 0.4 percent to C$39.85. Gold for December delivery rose 0.6 percent to $1,064.50 an ounce in New York, as a decline in the U.S. currency boosted the appeal of precious metals as alternative assets.

Rogers Communications Inc. rose 1.5 percent to C$28.75. Canadian Internet providers including Rogers will be allowed to manage traffic on their networks by restricting some content or applications, the country’s telecommunications watchdog said.

First Quantum Minerals Ltd. had the biggest gain on the S&P/TSX, adding 5.1 percent to C$75.98. The Canadian mining company that had a $553 million copper project canceled by the Congolese government last month said it may seek international arbitration in its dispute.

Ivanhoe Mines Ltd., which explores for minerals and metals in the Pacific Rim, added 3 percent to C$12.77.

SXC Health Solutions Corp. was the biggest loser on the S&P/TSX, dropping 5.4 percent to C$50.16. The pharmacy-benefits manager was downgraded to “market-weight” from “overweight” at Thomas Weisel Partners.

To contact the reporters on this story: Mary Childs in New York at mchilds4@bloomberg.net.