By Warangkana Chomchuen
NEW YORK (MarketWatch) — Canadian stocks dropped on Tuesday, as weak commodity prices weighed on the material and energy sectors, while shares of Royal Bank of Canada fell amid allegations of illegal futures trades.
The S&P/TSX Composite Index lost 130.76 points, or almost 1%, to 12,376.30. The index closed higher on Monday, adding 114.88 points to 12,507.06.
Shares of Royal Bank of Canada /zigman2/quotes/200638870/delayed CA:RY -0.11% /zigman2/quotes/206088494/composite RY +0.35% declined 2.8%. Canada’s largest bank by assets has been accused by the U.S. Commodity Futures Trading Commission in a lawsuit filed Monday of engaging in illegal stock futures trades with itself to gain Canadian tax benefits. The bank said in a statement it will “vigorously defend” its reputation.
Canadian bank sued over trades
Royal Bank of Canada was accused by the CFTC of making hundreds of millions of dollars in illegal futures trades with itself to reap tax benefit, Jamila Trindle reports on Markets Hub.
“Given no objection to the trading activity by either the exchange or the CFTC in 2005, it is absurd to now claim these trades were either fictitious or wash sales. This lawsuit is meritless,” the bank said.
Separately, the bank said it has reached a definitive deal to acquire full ownership of the RBC Dexia Investor Services Ltd. joint venture for about C$1.1 billion ($1.1 billion).
The S&P/TSX Capped Financials Index XX:TORGC189 -0.18% fell 1%.
Weaker commodity prices weighed on the mining sector, pushing the S&P/TSX Capped Materials Index /zigman2/quotes/210598474/delayed XX:TORGC195 -0.36% down 1.5%.
Inmet Mining Corp. shares were down 4%. Shares of Ivanhoe Mines Ltd. /zigman2/quotes/207656050/delayed CA:IVN 0.00% slumped 8.2% after TD Securities and Bank of Montreal downgraded their ratings on the stock.
Goldcorp Inc. shares fell 2.3%. Lake Shore Gold Corp. shares slumped 9.4% after the company said late Monday that an accident at its Timmins West mine in Ontario killed one of its employees.
Bucking the negative trend, shares of gold miner Pretium Resources Inc. /zigman2/quotes/209182782/delayed CA:PVG -2.04% rallied 6%. On Tuesday, the company reported a high-grade mineral resource estimate for its Brucejack project in northern British Columbia.
Canadian Natural Resources Ltd. /zigman2/quotes/203742161/delayed CA:CNQ +0.81% shares lost 1.3% after the company said Allan Markin has resigned as chairman for personal reasons, and will be succeeded by vice-chairman N. Murray Edwards.
In the technology sector, shares of Research In Motion Ltd. declined 7.6%. XX:TORGC187 -0.39% The BlackBerry maker launched the full version of its BlackBerry Mobile Fusion, a mobile device management software that enables enterprise customers to manage Apple’s iOS and Android devices through the BlackBerry server.
In other news, Air Canada shares fell 5.3% after Moody’s Investors Service downgraded the airline’s debt rating to Caa1 from B3. The agency cited its concerns over the airline’s ability to fund new planes and sizeable pension shortfalls amid rising costs of fuel and soft economic conditions. The airline’s outlook remained stable, Moody’s said.
Shares of construction firm SNC-Lavalin Group Inc. /zigman2/quotes/208720157/delayed CA:SNC +3.52% dipped 0.7%. The World Bank has temporarily barred the firm’s subsidiary from bidding on new World Bank projects, while it concludes an investigation into the subsidiary’s failed bid for a bridge contract in Bangladesh. SNC-Lavalin’s interim CEO said the firm launched its own internal investigation in this matter and will continue to cooperate with the World Bank.
Shares of Molson Coors Canada Inc. /zigman2/quotes/209219270/delayed CA:TPX.B +2.06% dropped 3.1% after its parent company Molson Coors Brewing Co. /zigman2/quotes/205165133/composite TAP +0.65% said Tuesday it will buy brewer StarBev L.P. from CVC Capital Partners in a deal worth 2.65 billion euros ($3.54 billion) to expand in Central and Eastern European beer markets.
In currency trading, the Canadian dollar remained relatively unchanged versus the U.S. greenback /zigman2/quotes/210561978/realtime/sampled USDCAD -0.2305% , with one U.S. dollar buying C$0.9909 from C$0.9905 late Monday.