Bloomberg News

Canadian Stocks Rise as U.S. Payrolls Increase

March 09, 2012

Canadian stocks rose, trimming a weekly loss, as insurance, base-metals and manufacturing shares advanced after the U.S. reported a bigger gain in payrolls than most economists in a Bloomberg survey had forecast.

Manulife Financial Corp. (MFC), North America’s third-largest insurer, advanced 1.8 percent. Viterra Inc. (VT), Canada’s biggest grain handler, jumped 24 percent after saying it “received expressions of interest from third parties.” Neo Material Technologies Inc. (NEM), which makes rare-earths and zirconium products, soared 37 percent after agreeing to be bought by Molycorp Inc.

The S&P/TSX Composite Index (SPTSX) gained 41.69 points, or 0.3 percent, to 12,503.62, reducing its weekly drop to 1.1 percent.

“The U.S. economy is clearly improving -- not stellar growth, but improving,” Jeff Bradacs, a money manager on a Manulife team that oversees about C$1.5 billion ($1.5 billion), said in a telephone interview. “The stronger job number in the U.S. is important because it’s driving demand for commodities and oil, and that’s important for the Canadian stock market.”

The S&P/TSX retreated for a second-straight week for the first time since Dec. 16. Raw-materials and energy stocks slipped as the U.S. dollar rose on concern about sovereign debt and a potential economic slowdown in Europe, amid speculation the U.S. Federal Reserve won’t begin a third round of asset purchases. Resources companies account for 47 percent of Canadian stocks by market value, according to Bloomberg data.

U.S. Employment

U.S. nonfarm employers added 227,000 jobs in February, the Labor Department said today in Washington. Economists had forecast an increase of 210,000 positions, according to the median estimate in a Bloomberg survey.

The S&P/TSX Insurance Index (STINSU) rose. Manulife, which derived 70 percent of its income from the U.S. in the third quarter, gained 1.8 percent to C$12.22. Sun Life Financial Inc. (SLF), an insurer with operations in Canada, the U.S. and Asia, climbed 1.4 percent to C$21.16. Industrial Alliance Insurance and Financial Services Inc. increased 1.6 percent to C$27.39.

Viterra surged 24 percent, the most in nine years, to C$13.58. The Canadian government’s plan to end the Canadian Wheat Board monopoly may encourage a takeover bid for the Regina, Saskatchewan-based company, Jason Zandberg, an analyst at PI Financial Corp. in Vancouver, said in a telephone interview.

Staples Index

Due to Viterra’s jump, the S&P/TSX Consumer Staples Index (STCONS) climbed the most since November 2008, wiping out its decline for the year.

Base-metals and coal producers rose as copper gained for a third day on the Comex in New York. Teck Resources Ltd. (TCK/B), Canada’s largest company in the industry, advanced 0.9 percent to C$36.53. First Quantum Minerals Ltd. (FM), the country’s second- largest publicly traded copper producer, increased 1.9 percent to C$20.93.

Copper and zinc producer HudBay Minerals Inc. (HBM) rallied 4.3 percent to C$12.17. Shane Nagle, an analyst at National Bank of Canada, raised his rating on the shares to outperform from sector perform two days after it reported fourth-quarter earnings that beat the average analyst estimate in a Bloomberg survey by 40 percent, excluding certain items. An outperform rating means the stock will gain more than other companies the analyst monitors.

Rare-Earths Acquisition

Neo Material Technologies jumped 37 percent to a record C$10.94 after Greenwood Village, Colorado-based mining company Molycorp agreed to buy the company for about C$1.3 billion ($1.3 billion) in cash and shares. Neo owners will receive C$8.05 in cash and 0.122 of a Molycorp share for each Neo share. Molycorp rose 19 percent in New York.

Rare Element Resources Ltd. (RES), which is developing a rare- earths project in Wyoming, surged 21 percent to C$6.10. Quest Rare Minerals Ltd. (QRM), which explores in eastern Canada, soared 17 percent to C$2.91. Tasman Metals Ltd. (TSM), which explores for rare earths in Europe, rallied 24 percent, the most since December 2010, to C$2.58.

Uranium producer Denison Mines Ltd. plunged 13 percent to C$1.52 after reporting a fourth-quarter loss of 9 cents a share, excluding certain items. Analysts had forecast a loss of 3 cents a share, according to the average estimate in a Bloomberg survey.

Magna International Inc. (MG), Canada’s largest auto-parts maker, climbed 2.6 percent to C$47.37. Twenty-three percent of its revenue last year came from the U.S. Gildan Activewear Inc. (GIL), a clothing maker that derived 89 percent of its sales from the U.S., rose 2.7 percent to C$26.62.

Sterling Resources Ltd. (SLG), which explores for oil and gas in Europe, climbed 21 percent to C$1.82 after sinking 35 percent in the previous four days. Stephane Foucaud, an analyst at FirstEnergy Capital Corp., reiterated his top pick rating on the stock today, saying its valuation is “extremely compelling” in a note to clients. A top pick rating means the company will provide a “materially higher” return than the peer group average.

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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