TORONTO (Bloomberg) — Canadian stocks fell the first time in three days, led by banks and commodity producers, on concern government aid won't revive economic and profit growth.

Royal Bank of Canada slid 3.1 percent, joining a rout in European lenders after Royal Bank of Scotland Group Plc forecast a full-year loss of as much as $41 billion. The UK said it may raise its stake in RBS and announced the second bank rescue in three months. The Bank of Canada will cut its key interest rate to a record low of one percent tomorrow, economists predicted.

Suncor Energy Inc. fell 4.4 percent as sliding crude prices signalled lower profits for oil producers. Magna International Inc. rose on speculation that Canada's government will announce more aid for the auto industry in its January 27 budget.

"Every day the bank losses grow and they have to raise more money," said Martin Anstee, a fund manager at Stone Asset Management in Toronto, which oversees about $520 million. "There's no need to rush into this market."

The Standard & Poor's/TSX Composite Index dropped 0.9 percent to 8,841.48 in Toronto, extending last week's 1.8 percent decline. Trading in Toronto was about half that of a week earlier as US equity markets were closed yesterday for the Martin Luther King Jr. holiday.

Royal Bank, the nation's biggest lender, lost C$1.04 to C$32.60, the lowest price since February 2005. Toronto-Dominion Bank, Canada's second-largest bank, dropped 3.4 percent to C$42.22. Canadian Imperial Bank of Commerce, the fifth-biggest, slid 2.8 percent to C$46.60. Bank of Nova Scotia, the third- largest, fell 1.9 percent to C$29.86

Canada's central bank will lower its target rate for overnight loans between commercial banks by 50 basis points tomorrow to stimulate lending, according to the median estimate of 20 economists in a Bloomberg survey. The Bank of Canada cut the benchmark by 0.75 percentage point to 1.5 percent on December 9. Crude oil futures fell $2.01 to $34.50 in electronic trading and touched $33.89 on forecasts that faltering global economic growth will drive down fuel use for a second year.

Suncor Energy declined 4.4 percent to C$26.26. The world's second-biggest oilsands producer is scheduled to report fourth-quarter earnings tomorrow. Net income may drop to about C$382 million from C$963 million a year earlier, according to the average estimate of four analysts in Bloomberg survey.

Canadian Oil Sands Trust, which reports results on January 30, dropped 5.3 percent to C$18.98. The largest oilsands producer was rated "short-term sell" by UBS AG analyst Andrew Potter, who said that a dividend cut is likely. The stock was also downgraded to "market perform" from "outperform" by BMO Capital Markets analyst Randy Ollenberger in Calgary.

Canadian Natural Resources Ltd., the owner of the Horizon oilsands project in Alberta, fell 2.4 percent to C$47.38.

"It'll be pretty ugly for energy earnings, mostly because of lower oil prices and reserve write-downs," said Anstee.

Raw-materials producers also declined, as bullion mining companies fell on lower gold prices. Barrick Gold Corp., the world's largest producer, slid 2.3 percent to C$41.74.

Magna International, Canada's biggest car-parts maker, gained five percent to C$38.78. The country's auto suppliers are asking for about C$1 billion in loans or loan guarantees from the Canadian government, said Gerry Fedchun, president of Canada's Automotive Parts Manufacturers' Association.

"We certainly expect something in the budget," Fedchun said, referring to the federal budget expected for January 27.

Telus Corp. and BCE Inc. rose, pacing gains among phone companies as investors concerned about lower earnings bought the shares for their steady cash flow and above-average dividends.

Telus, climbed 3.6 to C$36.66. Canada's second-largest phone company pays an indicated dividend of 5.2 percent, compared with a 4.2 percent payout for members of S&P/TSX, according to Bloomberg data. Larger rival BCE, which pays out 5.8 percent, advanced 0.9 percent to C$25.05.