TORONTO (Bloomberg) ? Canada?s Standard & Poor?s/TSX Composite Index may retreat about 25 percent from an all-time high in the next year as oil and metal prices slide, according to Hans Black, chairman of Interinvest Global Management.

Shares of energy and raw-material producers, which spurred the S&P/TSX?s climb to a record of 12,111.14 last week, will drop as demand for commodities from China slows and higher interest rates weigh on the US economy, said Black, whose firm manages $3 billion worldwide, including a Bermuda-based hedge fund.

?Canada is enjoying the fruits of high prices for energy and metals,? Black, 52, said in a telephone interview yesterday from Montreal. ?We don?t think there is inexhaustible global demand for commodities. There are signs that Chinese growth is already slowing and US interest rates will go higher than expected.?

Black?s call on the Canadian market contrasts with the outlook from strategists such as Jeff Rubin at CIBC World Markets in Toronto. Rubin in January raised his year-end forecast for the S&P/TSX to 13,200 on optimism that higher fuel prices would support energy stocks. The forecast from Black would put the S&P/TSX at about 9,050 within 12 months.

Interinvest manages money for clients such as pension funds and endowments. The firm?s customers may have benefited from the bullish stance Black took on gold stocks at the end of 1999.

The Amex Gold Bugs Index, which tracks 15 stocks, has jumped fourfold since that point, while the Standard & Poor?s 500 Index has dropped 11 percent. Canada?s S&P/TSX has climbed 44 percent since the end of 1999.

More than six years later, Black is concerned that an extension of the rally in gold stocks won?t be enough to support the Canadian market as prices for other commodities drop. He expects oil to slide to about $45 a barrel in the next two years from over $65 as demand in China slows.

?We are very mistrustful of the Chinese story,? said Black. ?They are suffering from a classic bubble. There is a growing overcapacity problem there ? lots of empty office space and factories. That has obvious implications? for commodity prices, he said.

A 9.9 percent surge in China?s gross domestic product last year helped send crude-oil futures to a record $70.85 in August, while prices for commodities such as copper and zinc have reached all-time highs in 2006.

Gauges of Canadian energy and raw-materials stocks, which together account for about 45 percent of the S&P/TSX?s value, have surged 54 and 32 percent, respectively, in the last 12 months.

EnCana Corp., Canada?s biggest natural-gas producer, has climbed 37 percent, while Teck Cominco Ltd., the world?s largest zinc producer and a copper miner, has surged 78 percent.

The US Federal Reserve?s series of interest-rate increases will also weigh on the Canadian market, according to Black. US consumer spending may slow as higher borrowing costs end the housing boom that has helped fuel growth in the world?s largest economy and Canada?s biggest trading partner.

The US central bank raised its benchmark interest rate by a quarter-point for a 15th straight time on Tuesday to 4.75 percent at the conclusion of Ben S. Bernanke?s first monetary-policy meeting. Black expects the new Fed Chairman may eventually boost borrowing costs as high as 5.5 percent.

?Bernanke will want to establish his credibility early on,? said Black. ?That removes some of the positives from the Canadian economy and takes the bloom off the Canadian market.?

Even so, Interinvest has a higher proportion of Canadian stocks among its holdings than the relative size of the country?s stock market globally. That?s because Black is still optimistic about gold producers amid industry consolidation such as Barrick Gold Corp.?s purchase of Placer Dome Inc. and surging prices for the metal.

The price of bullion, which reached a 25-year high of $579.50 an ounce on Feb. 2, may almost double to $1,000 by the end of the decade, Black said.

Interinvest owns shares of gold miners such as Cambior Inc., Eldorado Gold Corp., Gabriel Resources Ltd. and Southwestern Resources Corp.

?We are overweight Canadian stocks only by virtue of the fact that we own quite a few gold stocks,? said Black, who?s recently sold some of these shares. He still recommends buying companies such as Eldorado and Gabriel ?on dips?.