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Canadian stocks fell for a second day as commodities producers declined after Cypriot lawmakers rejected an unprecedented bank levy, sparking concerns Europe's debt crisis will worsen.
Pengrowth Energy Corp. (PGF) lost 1.2 percent as oil retreated after the euro fell to a three-month low versus the dollar. Legacy Oil + Gas Inc. slid 5.6 percent after an analyst raised concerns about its debt. Taseko Mines Ltd. and Teck Resources Ltd. fell at least 4 percent as copper touched the lowest level in almost seven months. Lululemon Athletica Inc. (LLL)slumped 2.6 percent after it said a shortage of women's pants will cause quarterly revenue to miss company forecasts.
The Standard & Poor's/TSX Composite Index (SPTSX) fell 7.89 points, or 0.1 percent, to 12,773.87 in Toronto, after gaining as much as 0.4 percent earlier in the day. The S&P/TSX has risen 2.7 percent this year. Trading volume was 5.5 percent below the 30- day average.
“It's a knee-jerk reaction, given how small Cyprus is,” said Anil Tahiliani, a fund manager with McLean & Partners in Calgary. The firm manages about C$1 billion ($973 million). The European Union “won't let Cyprus implode. I think people are using this as an excuse to take money off the table.”
The island nation's parliament voted against imposing losses on depositors, a key demand of European officials in return for bailout funds. Equities briefly pared losses after the vote when the European Central Bank said it will provide liquidity to Cyprus within existing rules.
While the country accounts for less than half a percent of the euro economy, the fight over the bank tax risks triggering new turmoil in the financial crisis that began in 2009 in Greece.
Canadian stocks rose earlier as data showed U.S. home construction increased by a more-than-estimated 0.8 percent in February, and building permits climbed to the highest level in almost five years.
Pengrowth fell 1.2 percent to C$5.60, as oil slid 1.7 percent to settle at $92.16 in New York. The euro declined as much as 0.9 percent to $1.2844, the lowest since Nov. 22, reducing the appeal of crude as an investment. Trican Well Service Ltd. dropped 1.4 percent to C$14.62.
Legacy Oil + Gas tumbled 5.6 percent to C$5.71. Allan Stepa, analyst with Desjardins Securities Inc., said Legacy's C$486 million in net debt at the end of 2012 remains a concern. “The key catalyst for Legacy will be additional measures to strengthen its balance sheet,” he said in a note to clients today.
Raw-materials producers contributed most to declines in the S&P/TSX index, falling 0.3 percent as a group. Taseko Mines dropped 4 percent to C$2.85 and Teck Resources declined 4.7 percent to C$28.45. Copper futures slid for a third straight day, losing 0.7 percent to settle at $3.4055 a pound.