CANADA STOCKS-TSX drops as Barrick leads golds lower; Valeant weighs

Thu Oct 31, 2013 4:55pm EDT
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* TSX ends down 94.07 points, or 0.7 pct, to 13,361.26
    * Barrick shares fall 5.9 pct after Pascua-Lama project

    By Alastair Sharp
    TORONTO, Oct 31 (Reuters) - Canada's main stock index fell
on Thursday from two-year highs hit a day earlier, as gold
stocks sank and negative earnings surprises weighed.
    Barrick Gold Corp fell 5.9 percent to C$20.28 after
the world's top gold producer said it was suspending
construction of a massive project in South America.
    "Without this mine being fully developed it will not be a
future source of production, so that's going to impact the
financial estimates in terms of cash flows and obviously impact
people's net asset valuations of the company," said Gareth
Watson, vice president of investment management and research at
Richardson GMP.
    Regulators halted construction on the Chilean side of the
Pascua-Lama project last spring, citing serious environmental
violations, while unionized Chilean workers have also threatened
to strike.
    "It's a double-edged sword. They can stop the bleeding
temporarily, and on the other side, send a message to the
Chilean government," said John Kinsey, portfolio manager at
Caldwell Securities. "They are saying 'enough is enough,' and I
think it is a good thing."
    Other golds also fell as the bullion prices slipped to
one-week lows. Kinross Gold dropped by 5.4 percent to
C$5.30, while Yamana gold slid 3.5 percent to C$10.34.
    The TSX materials subgroup, which includes precious and base
metals producers, slid 3 percent. All but one of the ten TSX
subgroups ended lower.
    Aircraft maker Bombardier plunged 10.2 percent to
C$4.74 after its profit fell on fewer plane orders and contract
issues in its train unit. 
    Valeant Pharmaceuticals International Inc fell 3.7
percent to C$110.15 after Canada's largest publicly traded
drugmaker posted a quarterly net loss and cut its full-year
revenue outlook. 
    In the energy sector, Canada's largest oil and gas company,
Suncor Energy Inc, said it was moving ahead with a
multibillion-dollar oil sands project. The stock
slipped 10 Canadian cents to C$37.89.
    Richardson GMP's Watson said Suncor's go-ahead was a more
useful signal for investors than Barrick's pause on Pascua-Lama,
given that oil prices and energy companies were more attuned to
global economic sentiment than gold, which has fluctuated wildly
on U.S. fiscal policy and other issues.
    "There is a difference between the two in terms of how
investors should be viewing them and how the global
macroeconomic outlook impacts their investing decisions," he
    The Toronto Stock Exchange's S&P/TSX composite index
 ended the session down 94.07 points, or 0.70 percent,
at 13,361.26. 
    Canada's benchmark stock index has risen sharply in recent
weeks as evidence mounted that the U.S. Federal Reserve would be
in no hurry to slow its monetary stimulus and China's economic
slowdown stabilized.
    "While we've seen some head fakes from the China economy in
the past 18 to 24 months, I think this one is sustainable," said
Craig Fehr, Canadian market strategist at Edward Jones in St.
Louis. "But any hiccups along the way are going to spur a lot of
volatility in the market."
    Faster growth in China could provide Canada's stock market
with a major boost, given the outsized role that resource
companies play in the index.
    China said on Wednesday that it expects steady foreign trade
this year and next. Its thirst for raw materials is a boon to
Canada's many producers in this sector.