TORONTO (Bloomberg) - Canadian stocks fell for a second day, led by energy and raw-materials producers, as a rebounding US dollar weighed on commodity prices.

Suncor Energy Inc., Canada's largest energy producer, dropped two percent as crude oil dropped the most in a month. Royal Bank of Canada, the nation's largest lender, declined 0.8 percent as Bank of America Corp. led US lenders lower. Goldcorp Inc. declined 2.9 percent after bullion lost the most in more than a week.

The Standard & Poor's/TSX Composite Index retreated 147.25 points, or 1.3 percent, to 11,234.88.

"People are starting to realize the market may have gotten ahead of itself," said Dennis Mitchell, who helps manage about C$4 billion as a portfolio manager at Sentry Select Capital Corp. in Toronto. "The US doesn't appear to be the engine for growth anytime soon."

The Reuters/Jeffries CRB index of commodity prices has rallied 38 percent since March 2 amid speculation inflation will increase as the recession ends, encouraging investors to seek alternatives to the US dollar as a hedge. Commodity-linked companies represent 47 percent of Canadian stocks by market value, and the S&P/TSX has surged 46 percent during the commodities index's advance.

In the earnings-reporting season that began on October 7, six of nine Canadian companies and 85 percent of S&P 500 companies have reported profit that beat analysts' expectations.

Crude-oil prices have jumped 11 percent and copper prices 7.1 percent during that period.

"The news is pretty good on earnings, but I think the market was fully anticipating that," said David Baskin, president of Baskin Financial Services Inc., in Toronto, which manages about C$300 million. "Now you sort of sit back and reassess.

"You can't trade on whispers in front of you. Now you have facts, and facts are inconveniently hard."

US equities fell today on concern lawmakers will phase out a tax credit for homebuyers and Bank of America Corp. will have to sell shares to pay back its government bailout.

The commodity index fell 1.6 percent, the most in a month, after rising as much as 0.5 percent earlier. The US dollar advanced 1.1 percent against the Canadian currency.

The rise of the US dollar yesterday helped push oil prices down 2.3 percent in New York. Suncor, which bought Petro-Canada in August, decreased two percent to C$37.61 to contribute the most to the S&P/TSX's fall. Canadian Natural Resources Ltd., the second-largest natural gas producer in the country, slipped 1.4 percent to C$73.40 as the price of the fuel retreated.

Birchcliff Energy Ltd., which explores for oil and gas in Western Canada, lost 5.8 percent to C$7.53 after analyst Brian Kristjansen of Genuity Capital Markets reduced his rating on the company to "hold" from "buy".

Gold prices fell for a third trading day. Goldcorp, the second-largest bullion producer in the country, declined 2.9 percent to C$40.95. The third-biggest producer, Kinross Gold Corp., dropped for a sixth day, sinking 3.8 percent to C$21.65.

Agrium Inc., Canada's second-largest fertilizer producer, tumbled 4.8 percent to C$52.88. On October 23, the company said third-quarter profit fell as much as 95 percent from a year earlier because of lower crop-nutrient prices. Larger rival Potash Corp. of Saskatchewan slipped one percent to C$104.86.

Financial companies retreated, following those in the US, after the Wall Street Journal said some US government officials want Bank of America Corp. to raise more capital. Royal Bank fell 0.8 percent to C$55.66. The third largest insurer in Canada, Sun Life Financial Inc., dropped 2.2 percent to C$29.83.

Research In Motion Ltd. added one percent to C$69.90. Verizon Communications Inc., the exclusive seller of RIM's touchscreen BlackBerry Storm in the US, reported third-quarter earnings of 60 cents a share, beating the average analyst estimate by 1.7 percent. Verizon also announced it would begin selling the second generation of the Storm smart phone this week. Contract manufacturer Celestica Inc., which makes BlackBerry devices among other products, increased 2.8 percent to C$9.21.