Bloomberg News

Canadian Stocks Rise as Copper Shares Gain on China Rate Outlook

October 26, 2011

Oct. 26 (Bloomberg) -- Canadian stocks rose for the third time in four days as commodity shares and banks gained on speculation China may cut interest rates, and a report the Asian nation may be willing to help fund Europe’s bailout effort.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, advanced 4.2 percent as copper prices rose. Canadian National Railway Co., the country’s biggest railroad, rallied 1.9 percent after reporting quarterly earnings that beat estimates. Royal Bank of Canada, the country’s biggest lender by assets, rose 1 percent as the Agence France-Presse report on China helped Canadian banks to erase an earlier decline.

The Standard & Poor’s/TSX Composite Index climbed 76.31 points, or 0.6 percent, to 12,186.06 after falling as much as 0.5 percent earlier.

“The situation in China isn’t as bad as some of the bears are making it out to be,” Gareth Watson, vice president of investment management and research at Richardson GMP Ltd., said in a telephone interview from Toronto. The firm oversees about C$16 billion ($15.8 billion). “There’s a number of tools China has at its disposal, both in monetary and fiscal policy.”

The S&P/TSX rallied 2.4 percent over the previous three days as investors speculated European leaders will reach a deal to prevent the region’s debt crisis from weakening banks and the broader economy. Continuing uncertainty led gold producers higher as the metal gained for a fourth day yesterday on increasing demand for a haven. The index is heading for its first monthly gain since February.

Copper rose to a four-week high after China’s Premier Wen Jiabao said officials will adjust economic policies for the world’s top consumer of the metal at a “suitable time and by an appropriate degree” and maintain reasonable growth in money supply.

Industrial Metal Shares

Teck Resources gained 4.2 percent to C$37.33. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, increased 8 percent to C$18.60. Ivanhoe Mines Ltd., which is building a copper and gold mine in Mongolia with Rio Tinto Group, rallied 2.1 percent to C$18.13.

Canadian Natural Resources Ltd. advanced 1.9 percent to C$34.49, leading energy shares higher. Encana Corp., the country’s biggest natural gas producer, rose 1.7 percent to C$21.08. Cenovus Energy Inc., the country’s fifth-biggest energy company by revenue, climbed 2.1 percent to C$36.21.

An index of Canadian financial stocks rose 0.5 percent after AFP said that China may be willing to respond to a European request to help them fund a package to solve the euro region’s debt crisis. The wire service cited unidentified government officials familiar with the situation.

Banks Gain

Royal Bank of Canada advanced 1 percent to C$48.16. Toronto-Dominion Bank, the country’s second-biggest energy company by market value, gained 0.5 percent to C$74.02. Bank of Nova Scotia, Canada’s third-largest lender by assets, rose 0.3 percent to C$51.58.

Canadian National gained 1.9 percent to C$76.56 to lead the S&P/TSX Industrials Index higher after reporting third-quarter earnings excluding some items that exceeded the average analyst estimate by 4.6 percent. The Montreal-based railroad was boosted to “buy” from “hold” at Desjardins Securities Inc.

Construction company Aecon Group Inc. gained 7.2 percent to C$8.51 after winning an $80 million contact for work at a new potash mine near Saskatoon, Saskatchewan.

RIM Slides

The S&P/TSX Technology Index fell the most of 10 industry groups as Research In Motion Ltd., the maker of the BlackBerry smartphone, slid 7.5 percent to C$20.89. The Waterloo, Ontario- based company struggling to revive enthusiasm for its BlackBerry Playbook tablet said a software upgrade for the device won’t come until February.

Progressive Waste Solutions Ltd., the waste-management company formerly known as IESI-BFC Ltd., dropped 7.7 percent, the most since January 2009, to C$21.55. The Vaughan, Ontario- based company reported earnings excluding some items that missed the average analyst estimate by 8.8 percent.

MI Developments Inc. jumped 6.4 percent to C$31.75, the highest price since October 2007. The real-estate company boosted its quarterly dividend to 50 U.S. cents a share from 10 cents a share and said it will strengthen its relationship with Magna International Inc.

Energy and raw-materials companies with operations in Argentina slumped after the country ordered resources companies to repatriate all export revenue in an attempt to stem accelerating capital flight.

Record Plunge

Extorre Gold Mines Ltd. plunged a record 21 percent to C$7.40. Oil and gas explorer Americas Petrogas Inc. sank 18 percent, the most since March, to C$1.54. Yamana Gold Inc., Canada’s fourth-largest producer of the metal by market value, dropped 4.7 percent to C$15.08.

Power producer Western Wind Energy Corp. tumbled 22 percent to C$1.59 after Algonquin Power & Utilities Corp. said it is no longer interested in buying the company. Algonquin made an unsolicited takeover offer of C$2.50 a share Oct. 11.

--With assistance from Matt Walcoff in Toronto. Editors: Joanna Ossinger, Stephen Kleege

To contact the reporter on this story: 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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