Bloomberg News

Canadian Stocks Extend Weekly Surge as Gold Producers Advance

October 28, 2011

Oct. 28 (Bloomberg) -- Canadian stocks rose, completing the biggest weekly gain since July 2009, after gold producers advanced on inflation concerns as investors weighed yesterday’s agreement to boost Europe’s bailout fund to $1.4 trillion.

Barrick Gold Corp., the world’s largest producer of the metal, gained 3.9 percent after German Chancellor Angela Merkel said the agreement won’t end the crisis “in a year.” Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 2.9 percent as copper finished its biggest weekly rally since 1988.

The Standard & Poor’s/TSX Composite Index gained 54.07 points, or 0.4 percent, to 12,519.51, extending its weekly advance to 4.8 percent.

“The gold trades are ultimately the inflation trades,” Marcus Xu, director of equity investments at Genus Capital Management in Vancouver, said in a telephone interview. The firm oversees about C$1.7 billion ($1.7 billion). “You can see a new round of gold rallying going forward based on more policy to supply more money.”

The index jumped 2.3 percent yesterday after European leaders, trying to arrest the continent’s debt problems, agreed to increase the size of their rescue fund and persuaded bondholders to take 50 percent losses on Greek debt. The S&P/TSX is heading for its biggest monthly rally since 2009 after seven straight months of declines.

Italian Bonds

The euro area faces a “crisis of confidence” that won’t be eliminated in the short term, Merkel said in a speech today in Deggendorf, Germany. Italy’s borrowing costs rose to a euro- era record at a sale of three-year bonds.

The S&P/TSX Gold Index advanced after Newmont Mining Corp., the biggest U.S. producer of the metal, reported third-quarter profit that beat analysts’ estimates on record bullion prices.

Barrick increased 3.9 percent to C$50.50 a day after disclosing earnings that surpassed the average analyst estimate in a Bloomberg survey. Goldcorp Inc., the world’s second-largest company in the industry, climbed 3.7 percent to C$49.63. Silver Wheaton Corp., Canada’s fourth-biggest precious-metals company by market value, rose for a sixth day, gaining 3.3 percent to C$35.76.

CB Gold Inc., which is developing a project in Colombia, soared 36 percent to C$1.82. The shares surged a record 168 percent this week after the company reported a discovery.

Increased Reserve

PetroMagdalena Energy Corp., which explores for oil and gas in Colombia, jumped 24 percent, the most since January 2008, to C$1.60 after Rafi Khouri, an analyst at Raymond James Financial Inc., became the third analyst in two days to raise his price estimate on the shares. Khouri boosted his 12-month forecast to C$2.30 from C$1.50 two days after the company reported a reserves increase.

Base-metals and coal producers in the S&P/TSX completed their biggest weekly advance since January 2009. Copper gained for a third day after Chile, the world’s biggest copper-mining country, reported a decline in production.

Teck increased 2.9 percent to C$41.50. First Quantum Minerals Ltd., the country’s second-biggest publicly traded copper producer, climbed 4.8 percent to C$22.26 after rallying 14 percent yesterday. Uranium One Inc., a mining company controlled by Moscow-based ARMZ Uranium Holding, rose 4.1 percent to C$3.03 to extend its weekly climb to 33 percent, the most since November 2008.

Copper and zinc producer Inmet Mining Corp. soared 7.4 percent to C$61.13 after reporting sales that beat the average analyst estimate. The shares have gained seven straight days, the longest streak since October 2009.

Manulife Retreats

Insurers in the S&P/TSX dropped after surging the most since May 2010 yesterday. Manulife Financial Corp., Canada’s biggest company in the industry, declined 1.8 percent to C$13.69, ending a five-day streak of gains. Sun Life Financial Inc., the country’s third-largest insurer, slipped 2.3 percent to C$25.22.

The S&P/TSX Energy Index climbed as natural gas futures rose on forecasts for snow and colder-than-normal weather for the U.S. Northeast.

Canadian Natural Resources Ltd., the country’s second- biggest energy company by market value, increased 1.5 percent to C$36.58. Encana Corp., Canada’s biggest natural gas producer, gained 1.6 percent to C$22.30. Niko Resources Inc., which operates in South Asia, rallied 6.1 percent to C$57.35.

Bombardier Inc., the maker of trains and airplanes, rose 8.3 percent to C$4.42 after CSR Corp., its joint-venture partner for trains in China, reported a 9.7 percent profit increase.

--With assistance from Tony Czuczka in Berlin. Editor: Stephen Kleege

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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