TORONTO (Bloomberg) - Canadian stocks fell, led by financial companies, on concern banks and insurers face further credit losses. Royal Bank of Canada, the nation's biggest lender, paced the decline.

The Standard & Poor's/TSX Composite Index erased an earlier advance after crude oil gave up gains and natural gas prices fell, sending energy shares including EnCana Corp. lower. Raw-materials producers such as Potash Corp. of Saskatchewan Inc. joined the sell-off late in the session.

"There are more writedowns coming," said Andrew Martyn, who helps manage the equivalent of about $450 million at Toronto-based Davis-Rea Ltd. "Investors better put on their crash helmets."

The S&P/TSX dropped 1.4 percent to 13,610.84 in Toronto after climbing as much as 1.2 percent. Canada's stock benchmark has retreated 9.7 percent from its June 18 record of 15,073.13.

Royal Bank slid four percent to C$44.16, the most since August 2004. The bank may record pretax writedowns of as much as C$1.5 billion ($1.48 billion) in the third quarter, on widening credit spreads and deteriorating sub-prime investments, Genuity Capital Markets analyst Mario Mendonca said in a note.

Manulife Financial Corp., Canada's biggest insurance company, dropped 4.1 percent to C$35.46 yesterday, almost wiping out its advance on Tuesday, which was the biggest in four years.

Crude oil rose one cent to $136.05 a barrel in New York, after tumbling 6.4 percent the past two days. Oil's still up 88 percent in a year.

Natural gas fell for a third day to the lowest in more than a month amid speculation supply is ample for the duration of the summer cooling season.

EnCana, North America's biggest publicly trade natural-gas company, fell 3.2 percent to C$81.18. Smaller rival Canadian Natural Resources Ltd. fell for a sixth-straight day, losing 3.5 percent to C$85.76.

Potash Corp. slipped 0.2 percent to C$218.80. The world's biggest maker of crop nutrients by market value rose as much as 3.1 percent earlier on a forecast for growing fertiliser demand.