Bloomberg News

Canadian Stocks Gain on Optimism About Solution for Greek Crisis

June 28, 2011

June 28 (Bloomberg) -- Canadian stocks rose for a second day as energy producers and bank shares gained amid optimism that a deal can be reached to help Greece avoid defaulting on its debt.

Suncor Energy Inc., Canada’s largest oil and gas producer, advanced 1.8 percent as oil futures jumped. Royal Bank of Canada, the country’s biggest bank, and Toronto-Dominion Bank increased at least 1.1 percent as financial stocks rallied. Westport Innovations Inc. soared 9.8 percent after General Motors Co. agreed to work on projects with the developer of natural-gas engine technologies.

The Standard & Poor’s/TSX Composite Index added 107.12 points, or 0.8 percent, to 13,073.61 at 1:39 p.m. in Toronto.

“Everyone’s thinking of Greece and there’s a little bit of optimism today as we wait for the vote tomorrow,” said Irwin Michael, who helps manage C$1 billion ($1 billion) as a money manager at ABC Group of Funds in Toronto. “Greece has to be repaired and put on the right track because you got other problematic countries that are being watched very closely.”

The S&P/TSX broke a three-week losing streak last week as investors speculated Greece will be able to enact austerity measures and avoid default. Greek lawmakers are in the midst of a debate this week to approve an austerity package needed for the release of the next phase of an international bailout.

Germany’s biggest banks and insurers will meet with the Finance Ministry in Berlin tomorrow as they seek to reach an agreement on their contribution to a Greek aid package, two people with knowledge of the matter said. A preliminary deal may be reached as early as tomorrow, they said. Greek Prime Minister George Papandreou’s 78 billion euro ($111 billion) plan to cut spending and sell assets is set for a vote in parliament tomorrow.

Energy Stocks Rally

S&P/TSX energy stocks rallied 1.1 percent, the second-most among ten groups in the benchmark index for Canadian equities. Suncor advanced 1.8 percent to C$37.63. Canadian Natural Resources Ltd., the country’s second-biggest energy company by market value, increased 2 percent to C$39.06. Industrial companies rose the most S&P/TSX Composite Index.

Oil rose from a four-month low amid speculation that Greek lawmakers will approve austerity measures to prevent a default on the country’s debt and on forecasts U.S. fuel demand will rise before the Fourth of July holiday. The U.S. Independence Day weekend typically marks the peak consumption period for U.S. motorists.

Banks Gain

The S&P/TSX Financials Index, the largest part of the S&P/TSX Composite, gained 0.5 percent. Royal Bank of Canada rose 1.5 percent to C$55.42. Toronto-Dominion Bank, Canada’s second- largest lender by assets, increased 1.1 percent to C$80.44.

Westport Innovations surged 9.8 percent to C$23.34 after agreeing with GM to develop natural gas controls, emissions and performance strategies. Westport will also open a new technical center in Michigan.

Stocks rose in Canada even after a report that confidence among U.S. consumers dropped to a seven-month low in June as Americans grew concerned about the outlook for jobs and wages. The Conference Board’s sentiment index decreased to 58.5 from a revised 61.7 in May. Home prices fell in the year ended in April by the most in 17 months, another report showed.

“Everyone is betting on Europe finding a resolution for the Greece,” said Ken Mack, an analyst and trader at Stone Asset Management in Toronto, which oversees about C$850 million. “The U.S. put out a consumer confidence number that was lower than expected and the market shrugged it off. It’s very day to day, the optimism comes and goes and today it’s up.”

--Editor: Stephen Kleege

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus