TORONTO (Reuters) - Canadian stocks fell on Tuesday as investors punished oil company Canadian Natural Resources Ltd (CNQ.TO) for its production and spending plans with the stock leading a broad decline in resource shares as gold and oil prices fell on worries about the U.S. fiscal cliff.
Shares of Canadian Natural fell 2 percent to C$27.60 despite a bullish price forecast for the company’s oil-sands crude, as investors had expected more substantial production growth, analysts said.
“Evidently the market felt that was a little disappointing,” said Gavin Graham, president of Graham Investment Strategy.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 32.56 points, or 0.27 percent, at 12,137.18. Seven of its 10 main sectors declined.
The energy sector fell more than 1 percent, the biggest sectoral weight on the index, as oil prices dipped. Among oil companies, Encana Corp (ECA.TO) was down 2.1 percent at C$21.17, and Nexen Inc NXY.TO fell 2 percent to C$24.17.
ShawCor Ltd SCLa.TO also dragged. The energy services company shed 14.1 percent to C$39.47 after it said it was unlikely to sell itself following a review of strategic alternatives it had undertaken.
“You’re seeing a combination of micro, company-specific issues and macroeconomic issues putting pressure on the energy sector,” said Craig Fehr, Canadian market strategist at Edward Jones in Missouri.
“Investors are looking at the global growth story, realizing that it’s continuing to weigh on external demand, particularly for resource exports that will come out of Canada,” he said.
The broad concern for investors was the risk that U.S. politicians would fail to reach a deal to prevent automatic government spending cuts and tax increases in early 2013 from tipping the economy back into recession.
President Barack Obama said on Tuesday there is not enough time this year to come up with an overhaul of the U.S. tax system and entitlement programs that Republicans want as a condition for an agreement to avoid the so-called fiscal cliff.
“It’s as bad as the NHL hockey discussions. Both sides have hardened their positions when there were expectations of hope,” said John Ing, president of Maison Placements Canada.
“They’re running out of time. There is maybe a week left before something meaningful can be done. It is a worry,” he added.
Bank of Montreal (BMO.TO) gained 0.6 percent to C$59.63 after Canada’s fourth-largest lender reported a 41 percent rise in quarterly profit, topping estimates, as wholesale banking income doubled and loan-loss provisions plunged.
Goldcorp Inc (G.TO) was up 1.5 percent at C$37.85 and fellow gold miner Barrick Gold Corp (ABX.TO) rose 1 percent to C$33.94, helping the index’s materials sector, which includes mining companies, to advance 0.2 percent despite bullion prices hitting a one-month low. <GOL/>
Additional reporting by Alastair Sharp, editing by Peter Galloway and Leslie Gevirtz