Canada Stocks Slump Most Since January on Oil; Suncor Drops
By John Kipphoff
Sept. 2 (Bloomberg) -- Canadian stocks tumbled the most in seven months, as the biggest commodity sell-off since March dragged down oil and metal producers in the Standard & Poor's/TSX Composite Index by almost 6 percent.
Suncor Energy Inc. dropped the most in at least 15 years, leading the biggest one-day decline in energy shares since November 2001. Goldcorp Inc. slipped to a four-week low, sending raw-materials shares to the index's steepest retreat.
The S&P/TSX fell 3.4 percent to 13,299.74 in Toronto, erasing $59.2 billion in market capitalization. Canada's main stock benchmark, which derives 47 percent of its value from energy and materials shares, has dropped 12 percent below its June 18 peak as oil slid from a record.
``Commodities are the key to the overall direction of the S&P/TSX,'' said Ian Nakamoto, who helps oversee about $4.5 billion at MacDougall MacDougall & MacTier Inc. in Toronto. ``There's an awful lot of red on the screens.''
The S&P/TSX, whose 101 percent gain since 2002 is more than twice as large as the increase in the Standard & Poor's 500 Index, fell eight times as fast today, reflecting its larger concentration of commodity shares. Energy and mining shares make up 16.8 percent of the S&P 500.
Suncor Energy slid 9.7 percent to C$54.91, the most since at least February 1993. The second-largest producer of crude from tar sands said August production of sweet crude products including diesel was lower than planned because of the unscheduled shutdown of a plant producing hydrogen, used in removing sulfur from synthetic crude oil.
Lower Output
Repairs on the plant should be completed in the fourth quarter and while sweet crude output will be lower for the duration of the work, average annual production levels are still expected to be in the range of 240,000 barrels per day to 250,000 barrels, Calgary-based Suncor said in a statement to regulators.
Imperial Oil Ltd., Canada's biggest oil and gas producer by output, fell 8.4 percent to C$50.05, for its steepest decline since October 2005. EnCana Corp., Canada's biggest energy company by market value, declined 5.2 percent to C$75.65. Canadian Natural Resources Ltd. fell 6.5 percent to C$84.73.
Oil dropped to a five-month low in New York and natural gas fell the most in more than a year as Hurricane Gustav spared the U.S. Gulf states the destruction caused by Katrina and Rita in 2005. A rally in the U.S. dollar eroded the appeal of raw materials priced in the U.S. currency, sending gold, copper, corn and soybean prices lower. The Reuters/Jefferies CRB Index of 19 commodities fell the most since March 19.
Bullion Miners
Goldcorp, the second-biggest bullion mining company by market value, slumped 7.4 percent to C$33.40. Larger rival Barrick Gold Corp. fell 5 percent to C$35.10.
Potash Corp. of Saskatchewan Inc., the largest producer of the crop nutrient, slid 6.5 percent to C$172.70.
Gauges of energy and materials shares fell 5.88 percent and 5.9 percent, respectively, pacing declines in all of the S&P/TSX's industries.
``People are selling commodities to buy the U.S. dollar,'' said Nakamoto. ``You have to be cautious about these companies.''
National Bank of Canada rose 2.3 percent to C$51.15 after being upgraded to ``sector perform'' from ``underperform'' by RBC Capital Markets analyst Andre-Philippe Hardy in Toronto. The nation's sixth-largest lender by assets reported an 18 percent increase in quarterly earnings last week.
To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.
Last Updated: September 2, 2008 18:14 EDT
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