Canadian Stocks Retreat as World Data Indicate Potential Economic Slowdown

Canadian stocks fell to the lowest level in a year after economic data from Europe, North America and China indicated the global recovery may be slowing and fuel and metal prices dropped on a stronger U.S. dollar.

Barrick Gold Corp. (ABX), the world’s largest gold producer, declined 6.1 percent, sinking with precious metals as the U.S. Dollar Index surged the most intraday since August 2010. Royal Bank of Canada (RY), the country’s biggest lender by assets, lost 3.4 percent as financial shares slumped to a 12-month intraday low. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, dropped 6.8 percent as crude retreated as much as 7.1 percent.

The Standard & Poor’s/TSX Composite Index fell 483.10 points, or 4 percent, to 11,471.91 at 2:06 p.m. Toronto time, after sinking to 11,467.87, the lowest intraday level since July 2010. The index declined as much as 4.1 percent, the most in six weeks.

“Nothing has changed with respect to Europe and there’s still a response in the marketplace to the Federal Reserve,” which cited significant risks to growth yesterday, said Gareth Watson, at Richardson GMP Ltd. in Toronto. Watson is vice president of investment management at Richardson GMP, which oversees about C$16 billion ($15.5 billion). “In terms of the Canadian market, the Chinese PMI number this morning isn’t helping sentiment amongst resource names, so we’re being hit from all sides.”

Canada’s stock benchmark slumped 10 percent this quarter through yesterday as energy and financial stocks dropped on concern the world’s economy will grow at a slower pace than previously forecast.

Forecasts Cut

The International Monetary Fund estimated on Sept. 20 that world gross domestic product will increase 4 percent this year and next, compared with June forecasts of 4.3 percent for 2011 and 4.5 percent for 2012. The S&P/TSX is set to decline for a seventh straight month, the longest streak since 1984.

Canadian retail sales fell twice as fast as economists forecast in July as demand for new automobiles and furniture dropped, Statistics Canada said today in Ottawa. The U.S. Labor Department said 423,000 Americans filed first-time claims for unemployment benefits last week, more than the 420,000 median estimate of economists in a Bloomberg News survey.

A report in Brussels showed that European services and manufacturing growth contracted for the first time in more than two years this month. China’s manufacturing may shrink for a third month in September, the longest contraction since 2009.

Gold, Silver Retreat

The Thomson Reuters/Jefferies CRB Index of 19 commodities fell as much as 4.5 percent, its biggest intraday slide since May 5. Gains in the dollar cut demand for gold as an alternative asset, sending the metal to a four-week low. Silver was set to retreat the most in a day since October 2008.

Barrick dropped 6.1 percent to C$50.34. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, declined 4.5 percent to C$49.20. Silver Wheaton Corp. (SLW), Canada’s fourth- biggest precious-metals company by market value, lost 9 percent to C$37.19.

Keegan Resources Inc. (KGN), which is developing a gold mine in Africa, plunged 27 percent to C$6.30 after issuing a resource estimate. The stock tumbled as much as 29 percent, the most intraday since 2004,

Forty of 43 S&P/TSX financial companies retreated. Royal Bank decreased 3.4 percent to C$44.97 after earlier touching C$44.38, the lowest intraday since June 2009. Canadian Imperial Bank of Commerce, the country’s fifth-largest lender by assets, slumped 4.9 percent to C$70.18 and earlier sank as much as 5.1 percent, the most intraday since May 2010. Manulife Financial Corp. (MFC), North America’s fourth-biggest insurer, plunged 5.6 percent to C$11.24, the lowest since March 2009.

Share Buyback

Insurance holding company Fairfax Financial Holdings Ltd. (FFH) rallied 5.6 percent to C$402.01 after saying it may buy back shares.

The S&P/TSX Energy Index fell for a fifth day, touching the lowest intraday level since September 2009. Suncor dropped 6.8 percent to C$26.22, the lowest since March 2009. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, declined 3.8 percent to C$30.76. Trican Well Service Ltd. (TCW), Canada’s biggest oilfield-services company, slid 9.4 percent to C$16.67 after plunging as much as 18 percent, the most intraday since December 2008.

Petrominerales Ltd. (PMG), which produces oil in Colombia, tumbled 10 percent to C$26.10 after saying it failed to find oil in at least three exploration wells. The shares sank as much as 14 percent, the most intraday since December 2008.

Copper Plunges

Base-metals and coal producers in the S&P/TSX retreated to the lowest since August 2010 as copper decreased the most since October 2008.

Teck Resources Ltd. (TCK/B), Canada’s largest company in the industry, fell 6.3 percent to C$31.90, the lowest since July 2010. First Quantum Minerals Ltd. (FM), the country’s second-biggest publicly traded copper producer, slumped 8.7 percent to C$15.33 to extend its four-day plunge to 28 percent, the most since November 2008. Grande Cache Coal Corp. (GCE), which mines in Alberta, tumbled 14 percent to C$5.27.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, dropped for a sixth day, declining 3.5 percent to C$48.63. The shares touched a 2011 intraday low of C$47.98. Corn futures decreased as much as 5.1 percent.

To contact the reporters on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net