CANADA STOCKS-TSX drops as Barrick leads golds lower; Valeant weighs


* TSX ends down 94.07 points, or 0.7 pct, to 13,361.26

* Barrick shares fall 5.9 pct after Pascua-Lama project


By Alastair Sharp

TORONTO, Oct 31 (Reuters) - Canada's main stock index fell

on Thursday from two-year highs hit a day earlier, as gold

stocks sank and negative earnings surprises weighed.

Barrick Gold Corp fell 5.9 percent to C$20.28 after

the world's top gold producer said it was suspending

construction of a massive project in South America.

"Without this mine being fully developed it will not be a

future source of production, so that's going to impact the

financial estimates in terms of cash flows and obviously impact

people's net asset valuations of the company," said Gareth

Watson, vice president of investment management and research at

Richardson GMP.

Regulators halted construction on the Chilean side of the

Pascua-Lama project last spring, citing serious environmental

violations, while unionized Chilean workers have also threatened

to strike.

"It's a double-edged sword. They can stop the bleeding

temporarily, and on the other side, send a message to the

Chilean government," said John Kinsey, portfolio manager at

Caldwell Securities. "They are saying 'enough is enough,' and I

think it is a good thing."

Other golds also fell as the bullion prices slipped to

one-week lows. Kinross Gold dropped by 5.4 percent to

C$5.30, while Yamana gold slid 3.5 percent to C$10.34.

The TSX materials subgroup, which includes precious and base

metals producers, slid 3 percent. All but one of the ten TSX

subgroups ended lower.

Aircraft maker Bombardier plunged 10.2 percent to

C$4.74 after its profit fell on fewer plane orders and contract

issues in its train unit.

Valeant Pharmaceuticals International Inc fell 3.7

percent to C$110.15 after Canada's largest publicly traded

drugmaker posted a quarterly net loss and cut its full-year

revenue outlook.

In the energy sector, Canada's largest oil and gas company,

Suncor Energy Inc, said it was moving ahead with a

multibillion-dollar oil sands project. The stock

slipped 10 Canadian cents to C$37.89.

Richardson GMP's Watson said Suncor's go-ahead was a more

useful signal for investors than Barrick's pause on Pascua-Lama,

given that oil prices and energy companies were more attuned to

global economic sentiment than gold, which has fluctuated wildly

on U.S. fiscal policy and other issues.

"There is a difference between the two in terms of how

investors should be viewing them and how the global

macroeconomic outlook impacts their investing decisions," he


The Toronto Stock Exchange's S&P/TSX composite index

ended the session down 94.07 points, or 0.70 percent,

at 13,361.26.

Canada's benchmark stock index has risen sharply in recent

weeks as evidence mounted that the U.S. Federal Reserve would be

in no hurry to slow its monetary stimulus and China's economic

slowdown stabilized.

"While we've seen some head fakes from the China economy in

the past 18 to 24 months, I think this one is sustainable," said

Craig Fehr, Canadian market strategist at Edward Jones in St.

Louis. "But any hiccups along the way are going to spur a lot of

volatility in the market."

Faster growth in China could provide Canada's stock market

with a major boost, given the outsized role that resource

companies play in the index.

China said on Wednesday that it expects steady foreign trade

this year and next. Its thirst for raw materials is a boon to

Canada's many producers in this sector.

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