Bloomberg News

Canadian Stocks Rise as Data Signal Chinese Factory Expansion

October 24, 2011

Oct. 24 (Bloomberg) -- Canadian stocks rose for a second day, led by energy and raw-materials producers, as oil and metals gained after a preliminary index of Chinese manufacturing indicated the first expansion in four months.

Canadian Natural Resources Ltd., the country’s second- biggest energy company by market value, increased 3.6 percent as crude oil climbed. Teck Resources Ltd., Canada’s largest base- metals and coal producer, advanced 6.2 percent as copper had its biggest gain since January 2009. Pharmacy-benefits manager SXC Health Solutions Corp. plunged 23 percent after Cigna Corp. agreed to buy Healthspring Inc., an SXC customer.

The Standard & Poor’s/TSX Composite Index rose 212.79 points, or 1.8 percent, to 12,162.28, its highest level since Sept. 20.

“China’s still the incremental buyer on most of these commodities, whether oil, copper, zinc or coal,” Anil Tahiliani, a Calgary-based money manager at McLean & Partners, said in a telephone interview. The firm oversees about C$1 billion ($995 million). “People want to get confirmation China’s not going into a hard landing.”

The S&P/TSX lost 1.1 percent last week, led by raw- materials companies, as gold decreased 2.8 percent and copper slumped 5.4 percent. The industry accounts for 21 percent of Canadian stocks by market value, according to Bloomberg data. The S&P/TSX Materials Index sank 19 percent from Sept. 8 through Oct. 21, leading the broader gauge to a 5.8 percent retreat.

China Purchasing

The preliminary Chinese purchasing managers’ index advanced to 51.1 from 49.9 last month, HSBC Holdings Plc and Markit Economics said. Readings above 50 signal expansion.

Japanese exports increased 2.4 percent in September from last year, more than twice the median forecast of economists in a Bloomberg survey, the Ministry of Finance said yesterday in Tokyo.

Crude oil climbed to a two-month high on the New York Mercantile Exchange. Canadian Natural gained 3.6 percent to C$34.52. Suncor Energy Inc., the country’s largest oil and gas producer, rose 2.9 percent to C$31.16. Precision Drilling Corp., Canada’s biggest contract drilling company, rebounded 8.1 percent to C$11.87 after slumping 5.3 percent Oct. 21.

Bankers Petroleum Ltd., which produces oil and gas in Albania, surged 11 percent to C$5.40 to extend its 10 percent advance Oct. 21 after Ticonderoga Securities LLC boosted its rating on the shares to “buy” from “neutral.”

Copper gained 7 percent after jumping 5.4 percent Oct. 21. Teck advanced 6.2 percent to C$36.94. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, increased 12 percent to C$17.83. Quadra FNX Mining Ltd., which operates in the U.S., Canada and Chile, rallied 5.5 percent to C$10.86.

Precious Metals

Gold and silver futures climbed as the U.S. Dollar Index fell for a fifth day. Barrick Gold Corp., the world’s largest gold producer, rose 3.4 percent to C$46.45 after five straight losses. Kinross Gold Corp., Canada’s third-biggest company in the industry by market value, gained 3 percent to C$14.24.

Silvercorp Metals Inc., which mines in China, surged 17 percent to C$9.60 after saying a KPMG LLC forensic investigation of its accounting found fraud assertions in two anonymous reports were untrue.

Fertilizer producers Potash Corp. of Saskatchewan Inc. and Agrium Inc. advanced as corn and wheat climbed. Potash Corp., the world’s largest company in the industry by market value, increased 1.7 percent to C$50.45. Agrium rose 3.1 percent to C$79.41.

SXC tumbled 23 percent, the most since August 2007, to C$43.52 after Cigna agreed to buy Healthspring for $3.8 billion. Healthspring is SXC’s largest customer and was to account for one-third of SXC’s revenue in 2012, analysts at UBS AG said in a note to clients. Cigna has its own pharmacy-benefits management unit.

--With assistance from Joshua Fineman and Clyde Eltzroth in New York. Editors: Stephen Kleege, Joanna Ossinger

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net; Kaitlyn Kiernan in New York at kkiernan2@bloomberg.net.

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


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