Canadian stocks hit four-week low as commodity producers drop

Canadian shares fell to their lowest level in almost four weeks, led by material producers and energy companies as commodities stretched losses on bets the Federal Reserve will scale back U.S. bond purchases. 

The resource-heavy benchmark Standard & Poor’s/TSX Composite Index (TSE:OSPTX) sank 1.3 percent to 12,444.92 at 12:01 p.m. in Toronto on Tuesday after touching 12,419.04, the lowest level since July 10. Almost five stocks declined for every stock that advanced.

The 234-member gauge had gained 1.4 percent this year through Friday. The market was closed on Monday for a holiday.

On Monday, Federal Reserve Bank of Dallas President Richard Fisher, one of the most outspoken critics of quantitative easing, said the central bank is closer to reducing the pace of monetary stimulus.

The materials sub-index, which includes mining shares, slumped 3.2 percent, as gold heads for its longest decline in eleven weeks. Barrick Gold Corp. (TSE:ABX) retreated 5.7 percent to C$16.37. Goldcorp Inc. (TSE:G) fell 5.2 percent to C$26.53

Allied Nevada Gold Corp. (TSE:ANV), the operator of the Hycroft mine in Nevada, plunged 20 percent to C$4.89, the lowest since 2008, after reporting a decline in earnings and deferring plans to build a processing plant at the site. Second-quarter net income slid to $4.23 million, or 4 cents a share, from $6.14 million, or 7 cents a share. 

Energy, the main index's second most heavily weighted sector, gave up 1.6 percent as oil, Canada’s largest export, fell for a third day. Canadian Natural Resources Ltd. (TSE:CNQ), Canada’s second-largest energy company by market value, dropped 2.7 percent to C$31.81. Suncor Energy Inc. (TSE:SU), Canada's largest energy company by market value, slid 1.5 percent to C$33.41.

Ensign Energy Services Inc. (TSE:ESI), a land-based drilling contractor, skidded 0.6 percent to C$17.59 after saying second-quarter earnings dropped 82 percent, weakened by foreign-exchange and other charges, and feeble demand for oilfield services. 

Financial shares, the main measure's most heavily-weighted sector, dropped 0.8 percent. Royal Bank of Canada (TSE:RY), Canada's biggest lender, fell 1.1 percent to C$63.72.

Industrial stocks gave back 0.5 percent. Ritchie Bros. Auctioneers Inc. (TSE:RBA), the world’s largest auctioneer of industrial equipment, advanced 2.4 percent to C$19.78. The company said second-quarter earnings fell 4 percent, while auction revenue inched up 1 percent. The Burnaby, British Colombia-based company also upped its quarterly dividend by 6 percent. 

Information technology shares were the only sector that advanced on Tuesday, led by Blackberry Ltd. (NASDAQ:BBRY), the Waterloo, Ontario-based smartphone maker, which extended gains for a fifth day, adding 10 percent to a 52-week high of C$10.24. 

The junior S&P/TSX Venture Composite Index (CVE:OSPVX) lost 1 percent to 913.97 at 12:10 p.m. on Tuesday, stretching this year's losses. The 393-member measure had tumbled 24.4 percent before Tuesday.

In economic news, Canada’s trade deficit shrank in June as exports rebounded from a two-month slump, led by shipments of cars and aircraft. Statistics Canada said on Tuesday that trade gap of the world's eleventh-largest economy dropped to C$469 million during the month, from a revised C$781 million in May. 

In metals, gold futures for December delivery fell 1.5 percent to $1,282.90 an ounce at 10:16 a.m. on the Comex in New York. 

In energy markets, crude for September delivery decreased 1.1 percent, to $105.44 a barrel at 12:21 p.m. on the New York Mercantile Exchange. 

In the U.S., Canada's biggest trading partner, shares dropped on Tuesday as earnings from companies including International Business Machines Corp. and American Eagle Outfitters disappointed and trade data raised concern the Federal Reserve may slash its bond purchases this year. The S&P 500 Index (INDEXSP:.INX) declined 0.6 percent and the 30-member Dow Jones Industrial Average (INDEXDJX:.DJI) fell 0.7 percent at 11:31 a.m. in New York.