Bloomberg News

Canadian Stocks Rise as Precious Metals Gain; Goldcorp Advances

November 07, 2011

Nov. 7 (Bloomberg) -- Canadian stocks rose after a decline last week as gold producers gained amid political turmoil in Greece and Italy.

Goldcorp Inc., the world’s second-biggest gold producer by market value, increased 3.6 percent as the metal advanced to a six-week high. Cameco Corp., the world’s largest uranium producer, fell 6.5 percent after its third-quarter profit missed the average analyst estimate in a Bloomberg survey.

The Standard & Poor’s/TSX Composite Index climbed 53.73 points, or 0.4 percent, to 12,461.98.

“The political environment is driving the stock market,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($984 million). “Gold has been around for thousands of years. When we have political instability, it’s been the safe haven.”

The index decreased 0.9 percent last week as financial stocks retreated while European officials debated the bailout of Greece and companies including Manulife Financial Corp. and Sun Life Financial Inc. reported earnings that trailed analysts’ average estimates. The S&P/TSX has slipped 7.3 percent this year through Nov. 4 after surging 50 percent the previous two years.

The yield on Italian 10-year government bonds rose to a euro-era record today on concern Prime Minister Silvio Berlusconi’s government is collapsing.

Party Defections

Three members of Berlusconi’s party have defected to the opposition in the past week, and six others called for the prime minister to resign in a letter to newspaper Corriere della Sera. As many as 20 are ready to leave the coalition, Repubblica daily reported yesterday, without citing anyone.

Italian Interior Minister Roberto Maroni told a talk show yesterday he fears the coalition no longer commands a majority in parliament.

The S&P/TSX Gold Index advanced to the highest close since Sept. 21. Barrick Gold Corp., the world’s largest gold producer, gained 2.5 percent to C$53.54. Goldcorp climbed for a fifth day, increasing 3.6 percent to C$54.30. Silver Standard Resources Inc., which mines in Latin America, jumped 7.5 percent to C$21.03 as silver rose.

Cameco slumped 6.5 percent, the most since March 16, to C$20.35 after reporting third-quarter earnings that missed the average analyst estimate by 19 percent, excluding certain items. The company also cut its 2011 uranium-production forecast.

Drugmaker’s Results

Valeant Pharmaceuticals International Inc., Canada’s largest drugmaker, decreased 5 percent to C$42.76. The shares soared 16 percent in the previous two sessions after the company topped analysts’ earnings estimates. Investors may have underestimated the effect of “special accounting” for some royalties in the company’s statement, David Risinger, an analyst at Morgan Stanley, said in a note to clients today.

Petrominerales Ltd., an oil and gas producer with operations in Colombia, fell for a sixth day, dropping 4.6 percent to C$22.97. Nathan Piper, an analyst at Royal Bank of Canada, cut his 12-month share-price estimate to C$46 from C$48, after the company missed third-quarter earnings estimates on Nov. 3.

Oil and gas explorer America’s Petrogas Inc. soared 19 percent to C$2.35 after Guy Gordon, an analyst at Byron Capital Markets, began coverage of the company with a “speculative buy” rating.

Oilfield-Services Company

Gasfrac Energy Services Inc., an oilfield-services company, surged 17 percent, the most since February 2009, to C$8.22. The company’s third-quarter earnings doubled the average estimate among analysts in a Bloomberg survey, excluding certain items.

Canadian National Railway Co., the country’s largest railroad, rose 1.1 percent to C$80.61 after saying it will buy back as many as 5.65 million shares from a third-party seller by March 31.

The S&P/TSX Telecommunication Services Index advanced to the highest since May 2008 after BCE Inc. and Telus Corp. reported third-quarter profit that surpassed analysts’ average estimates on Nov. 3 and Nov. 4, respectively.

Rogers Communications Inc., Canada’s largest wireless carrier, increased 0.9 percent to C$38.09. Regional carrier Bell Aliant Inc. climbed 0.7 percent to C$27.65.

--Editors: Stephen Kleege, Jeff Sutherland

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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