Canadian shares plunged more than 2% as a rout in commodities prices amid increasing concern China’s growth is slowing nudged down resource stocks.
The benchmark Standard & Poor’s/TSX Composite Index (TSE:OSPTX) dropped 2.3% to 13,468.27 at 12:48 p.m. in Toronto. Seven shares advanced for every issue that declined as all of the ten share groups were in negative territory.
The Asian Development Bank trimmed its forecast for China’s economic growth to 6.8% in 2015 and 6.7% in 2016, the second such reduction in just over two months. China is Canada’s second-largest trading partner.
The materials sub-index, which includes mining shares, was the biggest laggard with a 4.2% drop. Goldcorp (TSE:G), Canada’s largest gold miner by market value, dipped 3.4% to C$17.00. Barrick Gold (TSE:ABX), Canada’s second-largest gold miner, sank 5.5% to C$8.24.
Spot gold was down 0.9% at $1,123.41 an ounce, while U.S. gold futures for December delivery were down $9.80 an ounce at $1,123.00. Gold fell as renewed expectations that the Federal Reserve will raise interest rates for the first time in nearly a decade lifted the dollar.
Financials, the index's most heavily weighted sector, dived 2.1%. Royal Bank of Canada (TSE:RY), which has the heaviest weighting in the index, retreated 2.1% to C$71.54. Toronto-Dominion Bank (TSE:TD), the second-largest bank by market value, gave back 2.5% to C$51.30.
Canadian Apartment Properties REIT (TSE:CAR.UN) fell 4.7% to C$28.35. The company said it has agreed to buy an apartment portfolio in Montreal for about C$490mln. It also announced plans to sell 8.7 million units at C$28.70 each to raise about C$250mln.
The energy sector, the main index's second most heavily weighted group, surrendered 1.6% as oil prices fell on crude oversupply concerns.
Suncor Energy (TSE:SU), Canada's largest oil sands producer, sagged 1.4% to C$34.31. Canadian Natural Resources Limited (TSE:CNQ), Canada’s second-largest energy producer, lost 1.7% to $26.83.
AltaGas (TSE:ALA) fell 4.4% to C$33.96. The energy infrastructure company said it will buy three gas-fired electric power plants in California for $642mln from a fund run by Oaktree Capital Group (NYSE:OAK).
Total Energy Services (TSE:TOT) rose 2.5% to C$14.65. The diversified energy services supplier said it is proposing to make a C$2.90-a-share takeover offer for Strad Energy Services (TSE:SDY).
Light, sweet crude for October delivery recently fell 2.3% to $45.61 a barrel on the New York Mercantile Exchange.