Bloomberg News

Canadian Stocks Rise on Reports of New European Crisis Funding

December 07, 2011

Dec. 7 (Bloomberg) -- Canadian stocks rose, led by banks, on speculation the Group of 20, International Monetary Fund and European Central Bank may take measures to alleviate the European debt crisis.

Bank of Nova Scotia, Canada’s third-largest lender by assets, gained 2.3 percent after an analyst at Royal Bank of Canada boosted his rating on the shares. Enbridge Inc., the country’s biggest pipeline company, increased 2.5 percent after releasing plans for its Seaway pipeline. Canadian Oil Sands Ltd., the largest owner of the Syncrude project, fell 4 percent after saying it may have to shut down an oil-sands upgrader for maintenance.

The Standard & Poor’s/TSX Composite Index advanced 67.48 points, or 0.6 percent, to 12,148.73 a day before a meeting of European Union leaders.

“Everyone is waiting and holding their breath to see what happens in Europe,” David Cockfield, a money manager at Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$200 million ($198 million). “The great hope is with France and Germany more or less on the same page, with a little strong-arming they can bring the rest of the group in line and at least give some indication of a joint front to meet some of these problems.”

Like every other developed-market benchmark stock index besides the S&P 500, the S&P/TSX has fallen this year on concern the European debt crisis may weaken the global economy. The Canadian gauge dropped 10 percent this year through yesterday after advancing seven of the previous eight years.

Lending Plan

The S&P/TSX Banks Index gained after three euro-region officials with knowledge of the discussions said the European Central Bank may announce measures to stimulate bank lending tomorrow. The officials spoke on condition of anonymity because the deliberations are private.

Stocks extended their rally after Nikkei reported the G-20 is considering establishing a $600 billion IMF lending program for Europe. Shortly before markets closed, CNBC said the IMF denied the report.

Royal Bank, Canada’s largest lender by assets, advanced 2.2 percent to C$49.56. Toronto-Dominion Bank, its biggest domestic competitor, increased 1.3 percent to C$73.85.

Scotiabank climbed 2.3 percent to C$49.03 after Andre- Philippe Hardy, an analyst at Royal Bank, raised his rating on the shares to “outperform” from “sector perform.” Hardy cited “Scotiabank’s consistent strategy and execution, the greater growth potential of its international banking arm versus purely North American banking franchises, and the improved wealth management platform” in a note to clients.

Capacity Forecast

Enbridge rallied 2.5 percent to C$35.80, the first advance in a week, after forecasting capacity of 375,000 barrels of oil a day for its Seaway pipeline in 2013. Enbridge is reversing the pipeline’s flow to run from Cushing, Oklahoma, to Houston-area refineries.

Canadian Oil Sands dropped 4 percent to C$20.35. The company may it may shut down its oil-sands upgrader for maintenance if it can’t return to full production rates after a disruption last month.

EnCana Corp., Canada’s largest natural gas producer, rose 1.7 percent to C$20.48 after agreeing to sell two processing plants to Veresen Inc. for C$920 million.

Petrominerales Ltd., an energy producer with operations in Colombia, fell 5.9 percent to C$16.10 after sinking 16 percent yesterday. Ian W. Macqueen, an analyst at Canadian Imperial Bank of Commerce, cut his rating on the stock to “sector perform” from “sector outperform” a day after Petrominerales said it suspended drilling at two wells.

Imperial, Cenovus

Among other S&P/TSX energy companies, Imperial Oil Ltd., the country’s second-biggest company in the industry, gained 3 percent to C$44.50. Cenovus Energy Inc., the fifth-largest, advanced 2.5 percent to C$33.89.

Great Basin Gold Ltd. advanced 16 percent, the most since February 2009, to C$1.21. The prospector with operations in South Africa and Nevada said it executed a $150 million loan agreement.

Gold producer Jaguar Mining Inc. had the largest decline in the Canadian stock benchmark index, falling 9.2 percent to C$6.62, after saying Chief Executive Officer Daniel Titcomb left the company.

--With assistance from Gabi Thesing and Simone Meier in Frankfurt. 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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