CANADA STOCKS-TSX lower as Nexen, Progress dampen mining gains

Mon Oct 22, 2012 5:37pm EDT
 
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* TSX down 12.44 points, or 0.1 percent, at 12,403.54
    * Six of the index's 10 main groups higher
    * Progress Energy falls 9.28 percent to C$19.64
    * Nexen down 4.41 percent to C$24.04

    By Solarina Ho
    TORONTO, Oct 22 (Reuters) - Canada's main stock index
finished Monday's session slightly lower as the government's
rejection of a foreign takeover bid for Progress Energy
Resources Corp vibrated through the energy sector,
overshadowing gains in mining shares.
    Oil and gas shares, which make up about 25 percent of the
index, dominated the decliners after the government blocked
Malaysian state oil firm Petronas's C$5.17 billion bid for
Progress.
    The index's energy group slid 1.43 percent, with all five
top decliners in that sector.
    Progress, which was also hit by a number of cuts by analysts
in their share-price targets, sank 9.28 percent to C$19.64.
Earlier, it dropped as low as C$18.78, or 13.26 percent.
 
    "Are they (the Canadian government) saying the free market
system is closed in Canada or are they going to come up with a
better course of action?" asked Barry Schwartz, vice president
and portfolio manager at Baskin Financial Services.
    "This is a great lesson for investors: never buy stocks
based on its takeover premium or takeover potential."
    The surprise move blocking of the deal could be a harbinger
of the government's attitude toward a C$15.1 billion offer by
state-owned Chinese company CNOOC for oil producer Nexen Inc
. Nexen was one of the most heavily weighted decliners
on the index on Monday, falling 4.41 percent to C$24.04.
 
    "The Nexen deal is a different cup of tea. But if I were one
of the Nexen shareholders, I'd be a bit more nervous this
morning than I was last week," said Levente Mady, vice president
and senior portfolio manager at PI Financial Corp.
    Encana Corp was the biggest negative driver on the
TSX, giving back 3.95 percent to C$22.84, while Suncor Energy
 was down 1.13 percent at C$33.38. Talisman Energy
 dropped 3.76 percent to C$12.55.
    Schwartz noted that more money could now move to larger
energy companies such as Suncor or Canadian Natural Resources
, which have little chance of being taken over, as
investors focus on fundamentals and cash flow. But he added: "I
don't think the door's closed to takeovers."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed 12.44 points, or 0.1 percent lower, at
12,403.54. Six of the index's 10 main sectors advanced.
    Agrium Inc shares were the most influential gainer,
rising 3.18 percent to $107.26 after the Canadian fertilizer
maker and agricultural goods retailer said on Monday its board
plans to double its annual dividend payout. 
   Gold miners tracked rebounding bullion prices higher. Gold
rose after its biggest one-day drop in more than three months on
Friday. Agrium's gains and those of the precious metal miners
pushed the overall materials group up 1.14 percent. Barrick Gold
 rose 1.30 percent to C$39.05. 
    "I think it's healthy today what we're seeing. Sure the
whole energy complex is down, but you can find stocks that are
maintaining their own or being positive today," Schwartz said.
    In corporate news, Enbridge Inc, Canada's
second-largest pipeline company, said it will buy some gas
facilities from Encana in the Peace River Arch region in
northwestern Alberta to strengthen its natural gas gathering and
compression business. Enbridge stock was off 0.58 percent at
C$39.33.