The Canada Pension Plan Investment Board (CPPIB) posted a return of -1.3% in the fiscal first quarter due to falling equity markets.

The fund lost $1.7 billion in the quarter ended June 30, according to a statement.

A drop in government stimulus efforts and higher “concern about economic conditions in Europe” led to declines in global stock markets, the fund said. Canada’s benchmark Standard & Poor’s/TSX Composite Index declined 6.2% in the quarter.

CPPIB chief executive officer David Denison said challenges in international credit markets will hamper the manager’s ability to complete private-asset transactions.

“We expect that they will continue to be difficult to execute throughout the balance of fiscal 2011,” he said in the statement.