BLBG: Canadian Stocks Fall, Led by Royal Bank, BCE
By John Kipphoff
Dec. 9 (Bloomberg) -- Canadian stocks fell the first time in three days, led by finance shares, after Royal Bank of Canada said it will sell as much as $1.84 billion of discounted stock to shore up capital depleted by writedowns and credit losses.
Also weighing on financial companies was the Bank of Canada’s decision to cut its benchmark lending rate to a half- century low, saying Canada is “now entering a recession” as the global economic slump deepens.
BCE Inc. dropped after it hired accountants PricewaterhouseCoopers LLP, in an effort to salvage its C$52 billion ($41.5 billion) takeover by a group led by Ontario Teachers’ Pension Plan. Energy companies including EnCana Corp. advanced as crude-oil prices rallied from an earlier decline.
The Standard & Poor’s/TSX Composite Index fell 80.05, or 0.9 percent, to 8,487.07 at 10:01 a.m. in Toronto, dropping for the first time this week.
The S&P/TSX rose 5.6 percent yesterday, led by energy, mining and financial shares, on speculation that President-elect Barack Obama’s plan to implement the largest spending plan for public works since the 1950s may revive the U.S. economy, and demand for commodities.
Royal Bank dropped 5.8 percent to C$35.32. Royal Bank will sell 56.8 million shares at C$35.25 each, in a sale scheduled to close Dec. 22, the Toronto-based bank said yesterday. The banks managing the sale have an option for another 8.51 million shares.
Toronto-Dominion Bank, the nation’s second-largest bank, fell 2.7 percent to C$44.27.
Rate Slashed
Bank of Canada Governor Mark Carney and his rate-setting panel slashed the target rate for overnight loans between commercial banks by 75 basis points to 1.5 percent, the lowest since 1958. Two of 23 economists surveyed by Bloomberg predicted the move, with 20 calling for a half-point cut and one calling for a quarter point.
BCE, Canada’s biggest phone company, slipped 4.1 percent to C$23.65. BCE’s leveraged buyout was put in doubt last month when auditors at KPMG LLC told the company the deal would push it into insolvency. PwC was hired to help persuade KPMG to reverse its opinion, Montreal-based BCE said yesterday. If KPMG holds its ground, the transaction, set to close by Dec. 11, probably will collapse.
Crude-oil futures rose 0.6 percent to $43.97 a barrel in New York, on speculation that a government report will show U.S. fuel stockpiles dropped, and that OPEC will cut production.
EnCana, Canada’s largest oil and gas producer by market value, added 1.5 percent to C$56.43. Suncor Energy Inc., the world’s second-biggest oilsands producer, gained 1.2 percent to C$23.58.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
