Bloomberg News

Canadian Stocks Narrow Year’s Drop as Financial Companies Gain

January 01, 2012

Dec. 30 (Bloomberg) -- Canadian stocks rose, paring their first yearly loss since 2008, as financial and energy shares gained.

Toronto-Dominion Bank, Canada’s second-biggest lender by assets, increased 1.4 percent. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, advanced 1.8 percent. Canadian Pacific Railway Ltd., the country’s second-largest railroad, rallied 3.7 percent after a person familiar with the matter said its biggest shareholder urged the company to replace its chief executive officer.

The Standard & Poor’s/TSX Composite Index rose 113.39 points, or 1 percent, to 11,955.09, cutting the annual decline to 11 percent.

“Earnings in Canada have risen at a time when you have had declining bond yields,” Robert McWhirter, a money manager at Selective Asset Management Inc. in Toronto, said in a telephone interview. McWhirter oversees about C$140 million ($138 million). “That should make yields on bank stocks and stocks in general more attractive.”

Energy and raw-materials producers, which make up about 47 percent of the Canadian stocks market by value, retreated this year on concern the European debt crisis will hamper global growth. The index ended December with its ninth monthly drop of the year, the most since 1981. The yield on 10-year Canadian government bonds fell to a record-low close on Dec. 19. The S&P/TSX trades at 14.4 times earnings, 23 percent below its 10- year average.

Banks, Insurers

The S&P/TSX Financials Index narrowed its annual decline. TD rose 1.4 percent to C$76.29, extending a third-straight yearly gain. Royal Bank of Canada, its bigger domestic rival, increased 1 percent to C$51.98. Sun Life Financial Inc., Canada’s third-largest insurer, advanced 4.1 percent to C$18.90 after slumping 40 percent this year through yesterday.

Energy stocks in the S&P/TSX climbed as crude futures completed a third-straight yearly increase. Canadian Natural rose 1.8 percent to C$38.15. Suncor Energy Inc., the country’s largest oil and gas producer, gained 0.9 percent to C$29.38.

Nexen Inc., an energy producer with operations on five continents, advanced 3.8 percent to C$16.21. Shares of the Calgary-based company completed their first back-to-back annual losses since 1986.

CP rallied 3.7 percent to C$69.01 after the person familiar with the matter said William Ackman’s Pershing Square Capital Management LP wants the railroad to hire Hunter Harrison as CEO. Harrison, the former chief of Canadian National Railway Co., would replace Fred Green, said the person, who asked not to be identified because the details are private. CP’s closing price was the highest since June 2008.

CN, Canada’s largest railroad, climbed for a seventh day, increasing 1.6 percent to C$80.15 after surging 19 percent this year through yesterday.

--With assistance from Natalie Doss in New York. 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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