By Matt Walcoff Dec. 7 (Bloomberg) -- Canadian stocks fell for a third day, led by oil and gold producers, as the U.S. dollar rose toward a one-month high against the euro, damping the appeal for commodities as an alternative investment. Suncor Energy Inc., Canada’s biggest energy company, fell as oil slid for a fourth day to below $75 a barrel. Goldcorp Inc., Canada’s second-largest gold producer, lost 2.5 percent as gold extended its steepest retreat in a year. Potash Corp. of Saskatchewan gained 3.2 percent after Goldman Sachs Group Inc. recommended the fertilizer producer. “People are trying to hedge a real asset against what they perceive to be devaluation of currency,” said Michael Sprung, a money manager at Sprung & Co. Investment Counsel Inc. in Toronto, which manages about C$60 million ($57 million). “We’ve seen some strength in the currency, and so we’re seeing some downward pressure on gold.” The S&P/TSX fell 21.17 points, or 0.2 percent, to 11,489.63. The Reuters/Jeffries CRB Commodity Price Index has jumped 19 percent this year as investors seek hedges against the possibility of inflation and seek to gain from industrial demand as the global economy recovers from the recession. Energy and raw-materials companies make up 47 percent of Canadian stocks by market value. ‘Formidable Headwinds’ U.S. Federal Reserve Chairman Ben S. Bernanke said today the U.S. economy faces “formidable headwinds” and that inflation remains “subdued.” Oil prices weakened as Bernanke’s comments signaled fuel demand may be slow to recover. Suncor dropped 3 percent to C$36.76. Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, fell 2.4 percent to C$68.70. Bullion declined 0.5 percent, adding to a 4 percent slide on Dec. 4, on speculation that the dollar will continue to strengthen, reducing the appeal of the precious metal as an alternative investment. Goldcorp decreased 2.5 percent to C$43.56. Detour Gold Corp., which explores for the precious metal in Ontario, tumbled 5.7 percent to C$15.67. Barrick Gold Corp., the world’s largest gold producer, slumped 1 percent to C$44.63, extending an 8.7 percent drop on Dec. 4. Analyst Anita Soni of Credit Suisse Group AG lowered her rating on the stock to “neutral” from “outperform.” A ruling by the U.S. Appeals Court in San Francisco that additional environmental analysis is required at the company’s Cortez Hills project in Nevada creates uncertainty that will weigh on the shares, Soni said. Takeover Target Agrium Inc., Canada’s second-largest fertilizer producer, gained 4.6 percent to C$63.79 after its takeover target, CF Industries Holdings Inc., increased its bid for Terra Industries Inc. to about $4.58 billion. CF is fending off Agrium’s takeover bid. Potash Corp., Agrium’s larger Canadian competitor, rose 3.2 percent to C$127.93 after Robert Koort, a Goldman Sachs analyst, boosted his rating of the company to “buy” from “neutral.” Koort wrote that “investors are likely underestimating the 2010 U.S. demand recovery that could see staggering” year-over-year increases in volume. An index of industrial stocks rose 1.1 percent to a two- week high. Canadian National Railway added 1.4 percent to C$58. Building permits surged 18 percent in October, reaching the highest value since September 2008, led by work on single-family homes and non-residential projects, Statistics Canada said today. BlackBerry maker Research In Motion Ltd. climbed 2.2 percent to C$63.40 after reaching an agreement with Digital China Holdings Ltd. to sell the phone in China, broadening its access to the world’s largest mobile-phone market. RIM will use China Digital’s knowledge of the market to expand its presence in the country, the Waterloo, Ontario-based company said today in a statement. RIM didn’t disclose the terms. Franco-Nevada Corp., which owns mineral, oil and gas royalties, sank 6.6 percent to C$26.30 after offering to buy International Royalty Corp. for C$6.75 a share. IRC soared 50 percent, the most since its February 2005 initial public offering, to C$7.06. To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net.

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