Bloomberg News

Canada Stocks Rise as Energy Shares, Banks Gain on U.S. Data

October 05, 2011

Oct. 5 (Bloomberg) -- Canadian stocks rose for the first time in four days as financial and energy shares advanced on better-than-forecast economic reports from the U.S.

Royal Bank of Canada, the country’s biggest lender by assets, advanced 1.7 percent. Suncor Energy Inc., Canada’s largest oil and gas producer, gained 8.1 percent as crude oil rebounded from a one-year low after U.S. supplies fell. BlackBerry maker Research In Motion Ltd. increased 10 percent on speculation the company may explore strategic options.

The Standard & Poor’s/TSX Composite Index rose 279.31 points, or 2.5 percent, to 11,457.22 at 4 p.m. Toronto time.

“That’s really the economic data,” Jeff Bradacs, a money manager at Manulife Financial Corp. in Toronto, said in a telephone interview. Bradacs’s team oversees C$1.7 billion ($1.6 billion). “A lot of people are expecting a significant slowdown. We’re not really seeing that in the U.S.”

The S&P/TSX dropped 4.4 percent in the previous three days to the lowest since July 2010 as banks and energy companies declined on concern Greece may default and the European Union may require bondholders to face bigger losses on Greek debt. Canada’s stock benchmark lost 17 percent this year through yesterday, which would be the second-biggest annual retreat in the past 20 years behind 2008’s 35 percent plunge.

The Institute for Supply Management’s non-manufacturing index slipped to 53 from 53.3 last month. Economists had forecast the index would fall to 52.8, the median estimate in a Bloomberg survey. Readings above 50 indicate expansion. U.S. companies added 91,000 jobs last month, ADP Employer Services said, exceeding the median economist forecast of 75,000.

Financials Rally

The eight S&P/TSX banks and the three largest insurers all rose. Bank of Nova Scotia, Canada’s third-largest lender by assets, gained 3.1 percent to C$51.74. Royal Bank advanced 1.7 percent to C$46.72. Manulife, North America’s fourth-biggest insurer, increased 4.9 percent to C$11.95.

Crude oil climbed 5.3 percent in New York after the U.S. Energy Department said inventories declined 4.68 million barrels last week. All 15 analysts in a Bloomberg survey had forecast a gain.

Suncor advanced 8.1 percent, the most since March 2009, to C$27.50. Canadian Natural Resources Ltd., the country’s second- largest energy company by market value, rose 9.7 percent, the most since November 2008, to C$30.68. Oil-sands developer Ivanhoe Energy Ltd. gained 16 percent, the most since March 2009, to C$1.13.

Merger Rumors

RIM jumped 10 percent to C$24.64 for the biggest advance since December 2009. Vodafone Group Plc may seek to buy Canada’s largest technology company, the Independent said, citing “vague rumors.”

Simon Gordon, a Vodafone spokesman, declined to comment. Marisa Conway, a spokeswoman for Waterloo, Ontario-based RIM, didn’t immediately return a call seeking comment.

Base-metals and coal producers in the S&P/TSX gained 6.2 percent after rallying 8.1 percent, the most since May 2009, yesterday.

Teck Resources Ltd., Canada’s largest company in the industry, advanced 9 percent to C$33.77. Quadra FNX Mining Ltd., which operates in the U.S., Canada and Chile, increased 11 percent to C$9.19. Exploration Orbite VSPA Inc., which is developing an alumina project in Quebec and extraction technology, surged 26 percent to C$1.86.

Takeover Speculation

Capstone Mining Corp. climbed 16 percent to C$2.69 on speculation the Vancouver-based copper producer may be a takeover target, George Topping, a Toronto-based analyst at Stifel Financial Corp., said today in a telephone interview. The shares surged as much as 18 percent, the most intraday in 11 months.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, climbed 7.2 percent, the most since August 2010, to C$46.55 as corn and wheat futures rose. World agriculture stocks gained after Monsanto Co. forecast a bigger profit than analysts had estimated.

Gold stocks climbed as the U.S. Dollar Index fell from the highest level since January.

Goldcorp Inc., the world’s second-largest gold producer by market value, rose 3.1 percent to C$47.38. Yamana Gold Inc., Canada’s fourth-biggest company in the industry by market value, advanced 5.2 percent to C$14.27. Kirkland Lake Gold Inc., which operates in Ontario, surged 9 percent to C$16.75 after reporting a profit increase.

Industrial Companies

Eighteen of the 19 S&P/TSX industrial companies gained. SNC-Lavalin Group Inc., Canada’s largest engineering and construction company, advanced 6.8 percent to C$42.71 after closing at the lowest since July 2009 yesterday. Bombardier Inc., the maker of trains and airplanes, increased 6.1 percent to C$3.84.

MacDonald, Dettwiler & Associates Ltd., an aerospace and defense contractor, plunged 9.9 percent, the most since February 2009, to C$44.15. The drop reflects the completion of a Dutch auction share buyback and wasn’t unexpected, Thanos Moschopoulos, an analyst at Bank of Montreal, said in an e-mail message.

Neo Material Technologies Inc., which makes rare-earths and zirconium products, climbed 15 percent to C$6.78 for the biggest gain since January 2009. The shares’ recent decline was an “overreaction,” Steve Arthur, an analyst at Royal Bank, said in a note to clients. The shares tumbled 38 percent from Aug. 17 to yesterday.

--With assistance from Christopher Donville in Vancouver. Editors: Stephen Kleege, Joanna Ossinger

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net

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


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