BLBG: Canada Stocks Decline, Led by Banks; Nova Chemicals Tumbles
Canadian stocks dropped for a third day, led by financial and energy companies, on concern the recession will continue, after the U.S. signaled tighter bank regulation and oil prices declined.
Precision Drilling Trust fell 15 percent as crude decreased 3.1 percent to $40.38 a barrel. Barrick Gold Corp. lost 2.9 percent as bullion fell in London. Nova Chemicals Corp., the nation’s biggest chemical maker, tumbled 32 percent after a downgrade. Royal Bank of Canada, the nation’s biggest lender, slipped after as U.S. President Barack Obama said some banks remain “very vulnerable.”
The Standard & Poor’s/TSX Composite Index, which gets almost three quarters of its value from commodity and finance shares, fell 0.8 percent to 8,624.83 at 4 p.m. in Toronto. Canada’s stock benchmark slipped 3.3 percent in January for its fifth-straight monthly decline, matching 2001’s June-to-October retreat. The S&P/TSX slid for seven consecutive months in 1984.
“We don’t see the end of the recession yet,” said Martin Anstee, a fund manager at Stone Asset Management in Toronto. “Until we get visibility that it’s coming to an end, the stock market won’t turn.”
Financial stocks in the S&P/TSX declined 7.1 percent in January, one third the 27 percent drop in the comparable index for U.S. banks, brokerages and insurers for the same period. Canadian financial stocks followed U.S. banking shares lower today after a key lawmaker said Obama will require U.S. banks to boost lending before receiving additional taxpayer-funded support.
Continued Stress
Other reports showed the U.S. economy under continued stress as both manufacturing and consumer spending contracted in December.
Bank of Montreal fell 3.4 percent to C$32.10. Canadian Imperial Bank of Commerce slid 2.1 percent to C$45.52. Royal Bank dropped 0.6 percent to C$30.24.
Energy companies slid after oil fell as much as 4.4 percent on a government report in the U.S., the world’s biggest energy consumer, that the country will reduce demand. Precision shed 96 Canadian cents to C$5.27. Uranium One Inc., which mines the fuel for nuclear reactors in Africa and Central Asia, tumbled 8.7 percent to C$1.69. Pason Systems Inc., which leases instrumentation systems for oil rigs, slumped 7.7 percent to C$11.20.
Nova Chemicals slid 73 Canadian cents to C$1.54 after it was cut to “hold” from “buy” at Sanford C. Bernstein & Co. Nova’s debt was downgraded by Fitch Ratings and Standard & Poor’s because of concern the company won’t be able to obtain financing required by lenders.
Barrick fell 2.9 percent to C$44.79 after gold fell the most in three weeks. Some investors sold the metal on concern the rally to the highest price since July was overdone.
