Bloomberg News

Canadian Stocks Pare Weekly Decline as Gold Producers Advance

March 23, 2012

Canadian stocks rose, paring a weekly decline, as precious metal producers rallied after a decline in the U.S dollar spurred demand for gold and silver as alternative investments.

Barrick Gold Corp. (ABX), the biggest producer of the metal, advanced 1.6 percent. Silver Wheaton Corp. (SLW), the country’s third- biggest precious metals company by market value, rose 5.3 percent after reporting fourth quarter profit that beat analysts’ average estimate. West Fraser Timber Co., Canada’s largest forestry company, fell 2.2 percent after a U.S. report showed purchases of new homes unexpectedly fell.

The Standard & Poor’s/TSX Composite Index (SPTSX) advanced 103.85 points, or 0.8 percent, to 12,465.66 in Toronto, reducing its weekly decline to 0.3 percent.

“The dollar is the flipside of commodity prices,” Irwin Michael, a money manager at ABC Funds in Toronto, said in a telephone interview. Michael’s firm oversees C$1 billion ($1 billion). “It doesn’t take very much to cause a move. People are very nervous.”

The index had its fourth-straight weekly decline, the longest slump since November 2011, as manufacturing contracted in China and Europe and gold fell to a 10-week low before rebounding today. Energy and raw-materials companies make up 45 percent of Canadian stocks by market value, according to Bloomberg data.

Materials companies increased today, driven by precious metals stocks, as gold advanced the most in four weeks on speculation that investors will buy more bullion as an alternative to the slumping dollar. Gold had dropped 4 percent this month on concern over an economic slowdown in China before rebounding.

Precious Metals

Gold futures for April delivery climbed 1.2 percent on the Comex in New York while silver futures for May delivery increased 3 percent, the most since Feb. 28.

Barrick Gold advanced 1.6 percent to C$43.80. Silver Wheaton rose 5.5 percent to C$33.74 after reporting fourth- quarter earnings excluding some items of 41 cents a share, beating the average analyst estimate in a Bloomberg survey by 1 cent.

Construction and building materials companies declined after purchases of new homes in the U.S. unexpectedly fell in February for a second month, a sign the recovery in the housing market may be uneven. West Fraser Timber, which earned 47 percent of its revenue in the U.S. last year, dropped 2.2 percent to C$48.70.

Energy stocks in the S&P/TSX increased as oil surged almost $3 a barrel after Reuters reported Iranian oil exports will drop by 300,000 barrels a day this month because of tighter sanctions.

Imperial Oil Ltd. (IMO), Canada’s second-largest oil company by revenue, rose 2.6 percent to C$45.44. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, increased 1 percent to C$32.80.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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